Indirect Cost Rates (IDCRs) and Cost Allocation Plans (CAPs)

For planning, budgeting, and accounting purposes, it is important to account for the total costs of SVRA projects and programs properly. IDCRs and CAPs are the means by which costs are identified in a logical and systematic manner for reimbursement under Federal awards.

Indirect costs are those costs that are incurred for common or joint purposes and that benefit more than one organizational cost objective.  Because indirect costs are not readily assignable to a specific cost objective defined in a grant program, tracking and recovering these indirect costs are an important challenge for organizations in analyzing the total cost picture for operating grant programs.  Examples of indirect costs include salaries, and expenses for activities that benefit the entire organization, such as accounting, personnel, and purchasing costs. 

An Indirect Cost Rate is an allocation methodology for determining fairly what proportions of an organization's administrative costs each program should bear.  An Indirect Cost Rate represents the ratio between the total indirect costs and direct costs, expressed as a percentage.

Cost Allocation Plans are an allocation methodology that uses various allocation methodologies to distribute allowable direct and indirect costs to benefiting cost objectives.

Reviewing cost classifications is an important part of your overall fiscal management of the program.  There is not a universal rule for classifying costs as either direct or indirect. Costs are classified based on the benefit received by the entity incurring the expenditure.  The definition of the term  “cost objective”  is important to understand to determine what costs are indirect,  versus direct.  A  cost objective is a program,  function,  division,  activity,  award,  contract,  or other work unit against which costs can be incurred.

IDCRs or CAPS are necessary to ensure SVRA compliance with 2 C.F.R. Part 200, and serves as documentation for auditors, and provides accurate information for management.

If an SVRA is experiencing questions or concerns about this topical area, it is best to contact the RSA Financial Management Specialist assigned to the agency.

Regulatory Citations:

• 2 C.F.R. Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
  • There are many references in this part. We have highlighted a few of the specific sections below.
    • §200.1 Definitions
    • § 200.412 Classification of costs.
    • § 200.414 Indirect (F&A) costs
    • § 200.416 Cost allocation plans and indirect cost proposals.
    • § 200.420 Considerations for selected items of cost.
• 34 C.F.R. Part 76 State-Administered Programs
  • Starting §76.560 Indirect Cost Rates

Resources:

Cost Allocation Department of Education Guide for State and Local Governments

• • Section VII: Common Indirect Cost Issues

Department of Education Indirect Costs​ Online Training​

This 45-minute course provides an overview of indirect costs. It will include how to define indirect, direct, and direct administrative costs and how to apply the Regulatory and Statutory Framework of these costs. After completing this course, you will be able to:

• Define indirect costs, direct costs, and direct administrative costs.
• Apply the regulatory and statutory framework of these costs.
• Define an indirect cost rate (ICR).
• Identify factors affecting the allowability of costs.
• Determine the types of distribution bases.
• Calculate and apply an indirect cost rate.
• Understand the responsibilities of a grantee and cognizant agency when obtaining an indirect cost rate.
• Identify the types of indirect cost rates.

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Receiving federal grant awards is imperative to the effective administration of VR programs as federal funding may account for approximately 78.7% of a state’s overall VR budget. Not only can this funding be used for indirect expenditures such as the salaries for administrative and clerical staff, but it may also be used for direct expenditures that are critical to the mission of serving those with the greatest barriers to employment.

Understanding the basic elements of federal funding is important because, in the event that funding is used inappropriately, VR agencies may be subject to sanctions as outlined in 2 CFR § 200.339.

The following are important basic concepts to understand regarding grant award issuance:

President’s Budget

The President initiates the annual budget cycle with the submission of an annual budget proposal for the upcoming fiscal year to Congress. The President is required to submit the annual budget on or before the first Monday in February. However, Congress has provided deadline extensions both statutorily and, sometimes, informally.

The President recommends spending levels for various programs and agencies of the federal government in the form of budget authority (BA). Such authority does not represent cash provided to or reserved for agencies. Instead, the term refers to authority provided by federal law to enter into contracts or other financial obligations that will result in immediate or future expenditures (or outlays) involving federal government funds. Most appropriations are a form of BA that also provides the legal authority to make the subsequent payments from the Treasury (https://crsreports.congress.gov/product/pdf/R/R42388).

The U.S. Department of Education posts the budget tables from the President’s Budget on the Department’s website. These are recommendations that are not representative of the funds agencies will receive. Do not view these as a hard line for budget planning.

Budget Resolution

The budget resolution is Congress’s response to the President’s budget. It is a concurrent resolution because it is an agreement between the House and Senate that establishes overall budgetary and fiscal policy to be carried out through subsequent legislation. The budget resolution must cover at least five fiscal years: the upcoming fiscal year (referred to as the “budget year”) plus the four subsequent years.

The budget resolution is not sent to the President and does not become law. It does not provide budget authority or raise or lower revenues; instead, it is a guide for the House and Senate as they consider various budget-related bills, including appropriations and tax measures.

Law establishes April 15 as the target date for congressional adoption of the budget resolution. Since FFY 1977, Congress has frequently not met this target date. In recent years, Congress often did not adopt a budget resolution.

There is no penalty if the budget resolution is not completed before April 15, or not at all.

Appropriation Measures

When considering appropriations measures, Congress exercises the power granted to it under the Constitution, which states, “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

The Antideficiency Act explicitly prohibits federal government employees and officers from making contracts or other obligations in advance or in excess of an appropriation, unless authorized by law, and providing administrative and criminal sanctions for those who violate the act.

Under law, public funds may be used only for the purpose(s) for which Congress appropriated funds.

The timing of the various stages of the appropriations process tends to vary from year to year.

The Senate appropriations Committee typically begins reporting the bills in June and generally completes the committee consideration prior to the August recess. The Senate typically begins floor consideration of the bills beginning in June or July.

Conference Action

Once the House and Senate have both completed initial consideration of an appropriations measure, the Appropriations Committees in each chamber will endeavor to negotiate a resolution of the difference between their respective versions. The practice has generally been for the House and Senate to convene a conference committee to resolve differences between the chambers on appropriations bills. Alternatively, agreement may be reached through an exchange of amendments between the houses.

Regular appropriations bills contain a series of unnumbered paragraphs with headings, generally reflecting a unique budget account. Under these measures, funding for each department and large independent agency is organized in one or several accounts. Each account generally includes similar programs, projects, or items, such as a salaries and expenses account, although a few accounts include only a single program, project, or item.

Presidential Action

Under the Constitution, after a measure is presented to the President, the President has 10 days to sign or veto the measure. If the President takes no action, the bill automatically becomes law at the end of the 10-day period if Congress is in session. Conversely, if the President takes no action when Congress has adjourned, the President may pocket veto the bill.

Continuing Resolution

In general, budget authority provided in regular appropriations expires at the end of the FFY, September 30, unless otherwise specified. If action on one or more regular appropriations measures has not been completed by the start of the FFY, on October 1, the agencies funded by these bills must cease non-excepted activities due to lack of budget authority.

Continuing resolutions (CR) maintain the pre-existing appropriations at the same levels as the previous fiscal year (or with minor modifications) for a set amount of time. CRs typically provide temporary funding until a specific date or until the enactment of the applicable regular appropriations acts, if earlier. Once an initial CR becomes law, subsequent interim CRs may be used to make additional funds available.

In the event that Congress enacts a regular appropriation after a CR, the annual formula award amount to be received by each grantee will be calculated based upon the amount of the appropriation. Then, the total amount of funds awarded to the grantee through previous CRs will be subtracted from the annual formula award amount to determine the remaining balance due the grantee. This is important for fiscal planning purposes in the event there are multiple CRs and Congress enacts an appropriation at a funding level less than the previous FFY on which the CRs were based.

Mandatory Spending

Mandatory spending is composed of budget outlays controlled by laws other than appropriation acts, including federal spending on entitlement programs.

As a mandatory program, the VR program’s annual spending authority is generally increased by the Consumer Price Index for all Urban Consumers percentage. However, the final total spending authority amount can be affected by Congressional action (e.g., sequestration).

Grant Award Issuance

RSA’s grant award internal controls are contained in Standard Operating Procedures developed in accordance with Department policies that are updated at least annually and approved by the Department’s Risk Management Services.

VR Award Formula Variables

The Rehabilitation Act, as amended, sets out a formula for distributing VR grants to states and territories. Through this formula, a portion of the funds appropriated for the VR program are distributed to states based upon the grant allotment they received for fiscal year 1978. States’ 1978 allotments served to ensure that no state experienced a funding decrease when the formula was revised through a 1978 amendment to the Rehabilitation Act. Of the remainder of the funds, one-half is distributed based upon states’ general population and a factor that compares their per capita income to the national per capita income, and the other one-half, according to their population and the square of the per capita income factor. The larger a state’s population, the more funds it will receive. Conversely, the higher a state’s per capita income compared to the national level, the lower its allotment will be. The squaring of per capita income increases its influence on a state’s allotment. However, the formula mitigates the effect of per capita income for states with very high or very low per capita income levels by setting upper and lower limits. Ultimately, the final allotment for a state cannot be less than one-third of 1% of the total amount appropriated, or $3 million, whichever is greater. In federal fiscal year 2020, the minimum allotment was approximately $11 million.

Per Capita Income: The three-year average per capita income (PCI) average is calculated using the three most recent years of PCI data (available from the U.S. Department of Commerce, Bureau of Economic Analysis) that meet the requirements in Section 8(a)(2) of the Rehabilitation Act. PCI data is updated on each even-numbered year.

Population: Updated annually and is furnished by the U.S. Department of Commerce, Bureau of the Census by October 1 of the year preceding the fiscal year for which funds are appropriated.

When there are two VR agencies, the State is responsible for providing RSA with the percentage of the State’s VR and Supported Employment allotment that is to be awarded to each agency. Upon receipt of the State’s percentages, RSA will continue to allot federal VR and Supported Employment funds to each agency until such time as the State submits a formal request to change the allotment percentage(s).

Issuance Time Frame

Generally speaking:

• Due to factors both within and outside the control of RSA, the agency works to issue grant awards or supplements within three to four weeks after the funds are made available; and
• If there is a short-term CR that would expire before RSA could issue the funds, the short-term CR funds are combined with the subsequent CR.

G5

G5, which can be accessed at www.g5.gov, is the Department’s grant management system from which the following is entered and tracked:

• Grant award amounts for the initial grants are entered into G5 manually and verified by RSA fiscal unit staff employing a clear separation of duties;
• Federal Awardee Performance and Integrity Information System (FAPIIS) checks are completed;
• Data Universal Number System (DUNS) information is verified;
• Specific Conditions or High-Risk Status language is added to the grant awards as needed;
• Grant Award Notifications (GAN) are created and signed electronically; and
• Grant awards are obligated and the GAN email is sent to grantee.

Note: List is not exhaustive.

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RSA serves as an integral partner for State VR programs and is charged with overseeing many functions that ensure the fiscal management of VR programs is effective and efficient to enable agencies to assist individuals in obtaining gainful employment. These functions include the following:

• Administering formula and discretionary grant programs authorized by Congress;
• Evaluating, monitoring, and reporting on the implementation of federal policy and programs and the effectiveness of vocational rehabilitation, supported employment, and other related programs for individuals with disabilities administered by RSA;
• Administering the federal awards in accordance with Uniform Guidance Requirements in 2 CFR part 200, Financing of State Vocational Rehabilitation Programs in 34 CFR part 361-subpart C, Education Department General Administrative Regulations (EDGAR) requirements, and program requirements; and
• Coordinating with other federal agencies, State agencies, and the private sector, including professional organizations, service providers, and organizations of persons with disabilities for the review of program planning, implementation, and monitoring issues.

What’s the bottom line?

As with any partnership, positive outcomes depend on all partners actively working toward a common goal. RSA provides funding, technical assistance, and monitors program activities and expenditures to ensure the VR program is achieving its goals. VR agencies collaborate with RSA to review, understand, and comply with the terms and conditions of the grant to achieve program outcomes. This very important partnership promotes organizational effectiveness, so that quality services can be provided to individuals with disabilities.

Connecting with RSA

Each agency is assigned a Financial Management Specialist to address fiscal concerns and provide technical assistance and a State Liaison to address overall programmatic concerns.

The following are direct links to help you identify your Agency’s assignments:

• RSA Website Listing of Fiscal Staff and State Assignments
• RSA State Liaisons

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The FFY of appropriation is the FFY for which Congress appropriated funds to the U.S. Department of Education from which the Department awards program grants, specifically the period from October 1 through September 30. For example, the FFY 2021 State Vocational Rehabilitation Services grants were made from the 2021 FFY of appropriation, which covers the period of October 1, 2020, through September 30, 2021.

The Uniform Guidance uses the term “period of performance” rather than “grant period.” Period of performance is defined in 2 CFR § 200.1 in a manner like the EDGAR definition of “grant period.” A grantee may neither obligate nor pay expenditures for costs incurred prior to the start of the period of performance. For example, the cost for VR services provided to a consumer prior to the start of the period of performance for a grant award may not be charged to that grant award. Rather, those obligations must be charged to the prior grant award. Additionally, a grantee may not obligate award funds after the end of the period of performance for a grant award.

During the FFY of appropriation, the federal Funding Period listed in Box 6 of the GAN will be from October 1 to September 30 of that FFY. This represents the one-year period for which the award is made and in which the grantee may incur new obligations against the award. Section 19(a)(1) of the Rehabilitation Act permits grantees to carry over federal funds for obligation and expenditure in the subsequent FFY provided certain conditions are met, as described further below. This means that grantees may carry over the unobligated balance of federal funds for one FFY beyond the FFY of appropriation so long as the conditions of Section 19 of the Rehabilitation Act were satisfied.

For example, the FFY of appropriation for FFY 2018 awards began on October 1, 2017, and ended on September 30, 2018. The carryover period for FFY 2018 awards started on October 1, 2018, and ended on September 30, 2019. To carry over federal funds into the subsequent FFY for obligation and liquidation, grantees must:

1. Have an unobligated balance of federal funds at the end of the FFY of appropriation (i.e., on September 30, 2018); and
2. Have satisfied the applicable non-federal share requirement by the end of the FFY of appropriation (i.e., FFY 2018) for:
   1. The federal funds obligated or liquidated during the FFY of appropriation; and
   2. The unobligated balance of federal funds to be carried over to the subsequent FFY.

Upon submission of the grantee’s 4th quarter RSA-17 (which is for the reporting period ending September 30 of the FFY of appropriation), an RSA Financial Management Specialist will review the grantee’s report to determine whether the grantee met the requirements necessary to carry over federal award funds for obligation and liquidation in the subsequent FFY. If the grantee met the requirements of Section 19 of the Rehabilitation Act to carry over funds, RSA will process an administrative change to the current GAN extending the period of performance to include the carryover period. Upon completion of RSA’s administrative action, the grantee will receive a notice of a revised GAN with the revised period of performance that includes the carryover period.

Unless the Department authorizes an extension for the carryover period consistent with the requirements of Section 19 of the Rehabilitation Act, a non-federal entity must liquidate all obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance, as specified on the GAN (2 CFR § 200.344(b)).

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When used in connection with a non-federal entity’s utilization of funds under a federal award, obligations are orders placed for property and services, contracts and subawards made, and similar transactions during a given period that require payment by the non-federal entity during the same or a future period (2 CFR § 200.1). There is no authority for subawards, as defined in 2 CFR § 200.1, under the VR program, Supported Employment (SE) program and Client Assistance Program (CAP). Additionally, the future period in which obligations may be liquidated is limited by federal requirements and the terms and conditions applicable to the award. EDGAR requirements at 34 CFR § 76.707 provide additional guidance regarding when obligations are made.

For example, travel is considered obligated when the travel is taken, and personnel expenditures for State agency employees are considered obligated when the employee performs the services. In determining when an obligation is made, agencies must also follow their State laws, regulations, and policies and procedures, as applicable.

If the grantee has not met the requirements of Section 19 of the Rehabilitation Act to carry over federal funds for obligation and expenditure in the subsequent fiscal year, the grantee must incur all obligations, for which it has provided sufficient match funds, by the end of the FFY of appropriation (i.e., September 30). In this circumstance, the period of performance and the FFY of appropriation are the same. If the grantee has met the carryover requirements by the end of the FFY of appropriation, the period of performance will be extended to include the carryover period (subsequent FFY). This will enable the grantee to incur new obligations against federal award funds during the carryover period, as indicated by the revised period of performance on the Grant Award Notification (GAN). In other words, in this circumstance, the period of performance covers two FFYs – the FFY of appropriation plus the carryover year.

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While the term “match” and non-federal share are used in the VR regulations, the process described in statute is “cost sharing.” As defined in 2 CFR §200.1, cost sharing or matching means the portion of project costs not paid by federal funds or contributions (unless otherwise authorized by federal statute).

See also 2 CFR §200.306 and 34 CFR § 361.60.

The matching requirement is a State requirement. In instances when a State has both a blind and general VR agency, determination of whether a State met the required non-federal amount for total federal funds received is assessed on a State basis. This means that both agencies should partner, when possible, to review State goals and measure progress.

The unobligated balance (the amount of federal funds that VR agencies have not obligated to pay for contracts, services, activities, etc.) of authorized federal funds that a grantee may obligate and expend in a subsequent FFY provided the grantee has met the matching requirements by the end of the FFY of appropriation as outlined in Section 19 of the Rehabilitation Act of 1973, as amended Rehabilitation Act and 34 CFR § 361.64.

Non-federal share can only be credited as matching when obligated, in accordance with 34 CFR § 76.707, during the FFY of appropriation for an award. VR agencies must report all allowable non-federal expenditures incurred under the VR program, regardless of the source of funding, even if the amount reported exceeds the amount of non-federal share required to match the total federal funds awarded. This information is necessary for RSA to assess whether the State has met its maintenance of effort requirement under Section 111(a)(2)(B) of the Rehabilitation Act and 34 CFR § 361.62.

Additionally, third-party in-kind contributions are not an allowable source of non-federal share under the VR program and, therefore, should not be reported as non-federal expenditures (34 CFR § 361.60(b)(2)). Program income cannot be used to meet the non-federal share requirement 34 CFR § 361.63(c)(4).

Non-federal share expected from third-party cooperative arrangement (TPCA) certified expenditures of public agency staff salaries, when the TPCA staff has not yet completed the work, may not be included as an unliquidated obligation (or expenditure) because these expenditures cannot be certified until after the staff works the requisite number of hours. Pursuant to 34 CFR § 76.707(b), an obligation for services performed by State agency employees, including TPCA staff, is incurred at the time the work is performed.

All non-federal expenditures and obligations used for match purposes must be incurred during the FFY of appropriation. The VR agency must liquidate all unliquidated obligations reported as having been incurred by the end of the FFY of appropriation but not liquidated by that time. All unliquidated obligations reported for match purposes, incurred prior to the end of the FFY of appropriation, must be liquidated within the liquidation for that award (i.e., 120 days after the end of the period of performance, regardless of whether the award qualifies for carryover). Allowable unliquidated obligations incurred during the FFY of appropriation that are cancelled during the carryover period, or otherwise not liquidated after the FFY of appropriation, may not be used toward satisfying the match requirement for the FFY of appropriation for that particular award because those obligations never came to fruition for the VR program.

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Maintenance of Effort (MOE) outlines a grantee’s administrative requirement to maintain a specified level of non-federal expenditures (effort) to avoid a penalty levied against a future federal grant.

VR agencies must report all allowable non-federal expenditures incurred under the VR program, regardless of the source of funding, even if the amount reported exceeds the amount of non-federal share required to match the total federal funds awarded. This information is necessary for RSA to assess whether the State has met its MOE requirement.

For purposes of the VR program, a State must report all non-federal expenditures in the FFY in which those expenditures are incurred for purposes of satisfying the MOE requirement because MOE is determined on an FFY basis, not on the basis of a period of performance for an entire grant award.

Non-federal obligations and expenditures incurred during the carryover year do not count toward the prior FFY of appropriation’s match requirement but will count toward the current FFY’s MOE requirement.

Non-federal expenditures for the purpose of establishing a facility for a community rehabilitation program (CRP) will not be counted toward the State’s MOE (34 CFR § 361.62(b)); however, these non-federal expenditures, if obligated or liquidated within the period of performance, count toward satisfying the State’s match requirement. Additionally, Non-federal expenditures for the purpose of constructing a facility for a CRP will not be counted toward the State’s MOE (Section 101(a)(17)(C) of the Rehabilitation Act and 34 CFR § 361.62(b)).

MOE waivers, allowable under 34 CFR § 361.62, are requested for an amount of non-federal funds to be waived, it is not a waiver of the entire requirement. In order to sufficiently determine the amount of funds requested in a waiver, grantees must wait until the end of the period of performance of an award, due to the fact that obligations satisfy the non-federal share requirement. Only after all expenditures have been completed can the grantee adequately determine the amount of funds necessary to request via the waiver.

MOE waivers may be requested when a State VR agency has a decrease in non-federal funding due to exceptional or uncontrollable circumstances, such as a natural disaster or serious economic downturn.

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Reallotment is the process in which funds that cannot be used by one grantee, due to inability to meet non-federal share requirements or inability to fully expend federal funds, are relinquished by the original grantee and awarded to other grantees by the Commissioner of RSA (Section 110(b)(1) of the Rehabilitation Act and 34 CFR § 361.65(b)).

The reallotment process maximizes the use of appropriated funds under the State Vocational Rehabilitation Services (VR), Independent Living Services for Older Individuals Who are Blind (OIB), and State Supported Employment Services. Any funds received during reallotment are one-time funds and do not represent an ongoing addition to the State’s formula award allotment. Funds relinquished in reallotment represent a one-time reduction to the State’s funds and will not affect subsequent year formula grant award calculations.

Prior to requesting funds in reallotment, the State must ensure it can provide the required match (21.3% for VR, 10% for OIB, and 10% for the total amount of expenditures incurred with the half of the allotment reserved to provide Supported Employment services to youth with the most significant disabilities) for the additional funds received by September 30th of the FFY in which the funds are appropriated.

The total amount of funds available for reallotment in the VR program are dependent upon the amount of:

• Funds relinquished by VR agencies for the current FFY; and
• MOE deficits incurred by States that are not waived by the Secretary during the current FFY (i.e., MOE penalties).

States that request funds in reallotment and incurred an MOE penalty earlier in the FFY will have the MOE penalty amount deducted from the available pool of reallotment funds before determining the amount of additional VR funds awarded to the State through the reallotment process. This process ensures that a State cannot benefit from its own MOE penalty.

Example: An FFY 2019 MOE deficit was identified in January 2021 and an MOE penalty was levied in October 2021 against the FFY 2022 VR award.

• The MOE penalty would be included in the FFY 2022 VR reallotment pool; and
• The State VR agency incurring the MOE penalty will not be able to receive those funds back through FFY 2022 reallotment, but may receive other relinquished funds or MOE penalties incurred by other States.

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In some cases, such as when there is a belief that matching requirements will not be met for the State or when one State VR agency can benefit from additional funding, a State may opt to transfer funds between its General and Blind agencies.

Note: If you are in a State with a General and Blind agency and wish to transfer funds between the agencies, YOU MUST formally request that RSA transfer the funds between awards. The VR and Supported Employment funds allotted to each agency by RSA may ONLY be used for the provision of the VR or Supported Employment services assigned to the agency under the vocational rehabilitation services portion of the Unified or Combined State Plan. For example, a VR agency that serves individuals who are blind may not use its VR funds for the provision of VR services to individuals that are not eligible to receive services through the blind agency. VR agencies that serve all disabilities do not face similar limitation as they are statutorily required to serve all groups.

Because the VR funds awarded under a Unified or Combined State Plan can only be used for consumers that are included in that agency’s plan, RSA must officially transfer funds between General and Blind agency awards. DO NOT use internal accounting adjustments to transfer funds between the two programs.

RSA processes the transfer by reducing the federal funds allotted to one agency and then transfers the funds to the other agency. State VR agencies must ensure sufficient federal award funds remain to be transferred and that sufficient non-federal share was/can be met in the year of appropriation for the transferred federal award funds. Requests to transfer funds during the carryover period of an award take additional time for RSA to process. Upon receipt of such a request, RSA must first de-obligate the funds being transferred and then submit a request for approval to award prior year funds. After obtaining permission to obligate prior year funds, RSA will obligate the funds to the receiving agency. This process may take up to 30 calendar days to complete. The Department of Education reserves the right to deny any transfer of funds requests submitted near the end of the period of performance for an award. VR agencies must provide RSA sufficient time to transfer the funds and ensure the receiving agency has time to obligate and liquidate the additional funds received prior to the end of the period of performance.

Contact your RSA Financial Management Specialist for details regarding how to submit a request to transfer funds between Blind and General awards.

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Proper internal controls that provide accurate and timely financial reporting is important because it helps you and RSA determine if the requirements of 2 CFR § 200.302 (Financial Management) and 34 CFR, part 361, subpart C (Financing of State Vocational Rehabilitation Programs) are met. Furthermore, financial reporting may be used as a tool for fiscal forecasting. This can help you streamline and enhance the quality and efficiency of services that your State agency provides. It is noteworthy that internal control deficiencies in this area represents one of the most common fiscal findings identified by RSA through monitoring.

In accordance with 2 CFR § 200.328, financial reporting, as approved by the U.S. Office of Management and Budget, “must be collected with the frequency required by the terms and conditions of the federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting.”

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