Georgia Department of Labor

Workforce Investment Act Financial Management Technical Assistance Guide

June 2005

Georgia Department of Labor 148 Andrew Young International Blvd, N.E. Atlanta, Georgia 30303 www.dol.state.ga.us

Commissioner’s Office Financial Services Division Grants & Contracts Special Accounting Career Development

Suite 600

404-232-7300

Suite 472 Suite 372 Suite 650

404-232-3590 404-232-3600 404-232-3775

2

TABLE OF CONTENTS
CHAPTER 1 : INTRODUCTION .....................................................................................................................5 PURPOSE..........................................................................................................................................................6 SCOPE...............................................................................................................................................................7 WORKFORCE INVESTMENT ACT OF 1998................................................................................................7 WHERE TO FIND INFORMATION ON WIA ................................................................................................8 CHAPTER 2 : FUND DISTRIBUTION/FUNDING PROVISIONS...............................................................9 WIA GRANT AVAILABILITY REQUIREMENTS......................................................................................10 ALLOCATION OF WIA FUNDS ..................................................................................................................10 PERIOD OF AVAILABILITY .......................................................................................................................11 EXPENDITURE/OBLIGATION REQUIREMENTS ....................................................................................12 THIRTY PERCENT OUT-OF-SCHOOL YOUTH EXPENDITURE REQUIREMENT...............................13 TRANSFER OF FUNDS.................................................................................................................................13 REQUEST FOR ADDITIONAL FUNDS.......................................................................................................14 DEOBLIGATION OF FUNDS .......................................................................................................................15 PROGRAM INCOME.....................................................................................................................................16 STAND-IN COSTS .........................................................................................................................................17 CHAPTER 3 : FINANCIAL MANAGEMENT SYSTEM ............................................................................18 INTRODUCTION ...........................................................................................................................................19 FINANCIAL MANAGEMENT SYSTEM STANDARDS.............................................................................19 FEDERAL/STATE REPORTING DEFINITIONS.........................................................................................22 ACCRUALS....................................................................................................................................................23 OBLIGATIONS ..............................................................................................................................................24 DRAWDOWNS ..............................................................................................................................................25 FINANCIAL STATUS REPORTS .................................................................................................................26 TOTAL FEDERAL OUTLAYS......................................................................................................................27 CONTRACT DEOBLIGATION PROCESS...................................................................................................27 OVERSIGHT & MONITORING....................................................................................................................27 FEDERAL ACCOUNTING REPORTING SYSTEM ....................................................................................28 FIFO/ADJUSTMENT PROCESS AT CENTRAL OFFICE...........................................................................29 CHAPTER 4 : ALLOWABLE COSTS ...........................................................................................................30 ADMINISTRATIVE COSTS..........................................................................................................................31 PROGRAM COSTS ........................................................................................................................................31 SUMMARY OF ALLOWABLE COSTS .......................................................................................................32 DISALLOWED COSTS..................................................................................................................................33 CHAPTER 5 : COST ALLOCATION AND COST POOLING ...................................................................34 INTRODUCTION ...........................................................................................................................................35 TYPES OF POOLS .........................................................................................................................................35 COST POOL MANAGEMENT......................................................................................................................35 ALLOCATION BASES ..................................................................................................................................35 PROCEDURE FOR COST POOLS ................................................................................................................36 CHAPTER 6 : FINANCIAL REPORTING SYSTEMS AND FORMS .......................................................37 FINANCIAL STATUS REPORTING SYSTEM............................................................................................38 DRAWDOWN SYSTEM................................................................................................................................39 VOLUNTARY DEOBLIGATION..................................................................................................................39 FUND TRANSFERS.......................................................................................................................................39 REQUEST FOR ADDITIONAL FUNDS.......................................................................................................39 WIA FINANCIAL CLOSEOUT .....................................................................................................................40 CHAPTER 7 : PROCUREMENT & PROPERTY MANAGEMENT..........................................................41 PROCUREMENT POLICIES & PROCEDURES ..........................................................................................42 PROCUREMENT METHODS .......................................................................................................................43

3

PERFORMANCE-BASED CONTRACTS.....................................................................................................45 REQUIRED CONTRACT CLAUSES ............................................................................................................48 PROCURING AN AUDIT ..............................................................................................................................49 EQUIPMENT AND RELATED REQUIREMENTS......................................................................................50 CHAPTER 8 : AUDITS AND AUDIT RESOLUTION .................................................................................51 AUDIT REQUIREMENTS .............................................................................................................................52 VENDOR OR SUB-RECIPIENT RELATIONSHIP ......................................................................................53 AUDITS ..........................................................................................................................................................53 AUDIT RESPONSIBLITIES (OMB A-133) ..................................................................................................56 FINANCIAL SETTLEMENT/FINAL DETERMINATION ..........................................................................64 CLOSEOUT, SUSPENSION AND TERMINATION ....................................................................................65 CHAPTER 9 : APPENDICES..........................................................................................................................68 APPENDIX A: WIA LOCAL AREA REQUIREMENTS..............................................................................69 APPENDIX B: INSTRUCTIONS FOR FINANCIAL STATUS REPORTING SYSTEM ...........................75 APPENDIX C: WIA GRANT FUNDING PERIODS....................................................................................80 APPENDIX D: EXAMPLES OF FARS REPORTS ......................................................................................83 APPENDIX E: SAMPLE ADJUSTMENT AND FIFO WORKSHEETS .....................................................87 APPENDIX F: FINANCIAL REPORTING SYSTEMS FORMS .................................................................92 APPENDIX G: ACRONYMS ........................................................................................................................99 APPENDIX H: GLOSSARY........................................................................................................................101

4

CHAPTER 1 : INTRODUCTION

PURPOSE SCOPE WORFORCE INVESTMENT ACT OF 1998 WHERE TO FIND INFORMATION ON WIA

5

PURPOSE The purpose of this document is to provide Local Workforce Investment Areas (LWIAs) with operational guidance and information that will assist in ensuring that the Governor’s financial responsibilities under the Workforce Investment Act (WIA) are fulfilled. In accordance with 29 CFR 97.5, all other program manuals, handbooks, and other nonregulatory materials, which are inconsistent with this manual, are superseded, except to the extent they are required by statute. The Financial Management Technical Assistance Guide (TAG) is issued by the Georgia Department of Labor and compiles financial management information that is intended to assist LWIAs in complying with Federal and State requirements and in improving the operational integrity of local financial management systems. Local areas may also find the “Georgia Workforce Investment Act Workforce System Guidelines,” issued by the GDOL Workforce Development Division, to be a useful resource tool as it addresses both programmatic and financial issues. The format offers explanations/clarifications of selected rules and regulations and also answers questions asked by interested parties pertaining to WIA. The TAG does not replace or supplant the Act or the regulations and the requirements contained in applicable OMB Circulars and the Uniform Administrative Requirements. It should be noted that in some instances, State guidance may be more restrictive than the applicable Federal guidance or it establishes new guidance where none existed. If there are any instances where the TAG would seem to conflict with the Federal guidance, the Federal guidance takes precedence. The detailed administrative requirements of the Office of Management and Budget (OMB) Circulars such as A-87, 29 CFR 95, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, et cetera: Final Rule, the OMB issuance entitled Uniform Administrative Requirements for Grants and Cooperative Agreements with State and Local Governments (Common Rule) issued by the United States Department of Labor (USDOL) as Title 29 CFR 97, and the implementing regulations in Title 41 CFR 2970 of the Federal Register apply to all titles under the Act. LWIAs may elect to issue operating guidelines that are more restrictive so long as they are consistent with State and local laws or other applicable Federal regulations. This TAG is intended to assist individuals who are responsible for financial management in effectively performing their responsibilities. The TAG is provided for State, local and other grant staff responsible for ensuring that Workforce Investment Act Title I programs are properly managed and are fiscally sound. Although financial management staff will be primarily users of this TAG, it is expected that program administrators and other staff will also use this document. The TAG is specifically designed to: Provide operational guidance under WIA Title I; Strengthen fiscal and program accountability; Assist LWIAs in completing required reports in compliance with regulatory mandates, and Provide necessary information for financial analysis and monitoring.

6

As policy or program guidance changes, and those changes affect the content of this TAG, this TAG will be periodically revised to be consistent with such policy changes and guidance. SCOPE This document incorporates State policies and procedures according to the Act, administrative standards, cost principles, and applicable State and Federal laws and regulations. The cost principles as contained in 29 CFR 97.22(b), which lists the types of organizations (State, Private Non Profit, Educational Institutions, For Profit, etc.) and the applicable cost principles, apply to recipients and sub-recipients of WIA funds. The conditions prescribed in Sections 181, 194, 195 of the Act apply to all programs under Title I except as provided elsewhere in the Act or the WIA regulations. As to this manual, the entity described as “recipient” is defined as the LWIA who receives Workforce Investment Act funds from the Georgia Department of Labor. The entity described as “sub-recipient” is defined as the vendors and contractors who report directly to the LWIA and are accountable to the LWIA for the use of funds provided. WORKFORCE INVESTMENT ACT OF 1998 Since the inception of the Workforce Investment Act of 1998 (WIA), it has been the vision of the State of Georgia to have a world-class workforce investment system that enables individuals to achieve their highest potential, support and encourage entrepreneurship, ensure that employers have the skilled workers they need to compete effectively in the global economy, and capitalize on the untapped potential of underemployed and discouraged workers including youth and other workers with special needs. The mission of the State of Georgia’s WIA program is to bring business, labor, education, and the public sector together to develop strategies and support efforts to best meet the needs of the State’s workforce and employers, thereby enhancing Georgia’s competitiveness in the global economy. In 1999, the Governor of Georgia directed the Commissioner of the Georgia Department of Labor (GDOL) to serve as his designee for the implementation and oversight of the Workforce Investment Act. To this end, the GDOL strives to make available a superior workforce around the State by providing clear, viable, and accurate information, guidance, and support for the local areas that administer the program across the State.

7

WHERE TO FIND INFORMATION ON WIA Local Workforce Investment Areas (LWIA) may contact the GDOL to find information regarding any questions they may have concerning the WIA program. The internet also provides great resources for WIA regulations and requirements on both Federal and State websites. The following is a list of several websites available to help answer any questions you may have. This list, which is not all-inclusive, is offered only as assistance to the LWIAs. www.firstgov.gov www.whitehouse.gov/omb/circulars/index.html www.gpoaccess.gov/cfr/ www.dol.state.ga.us www.dol.gov www.doleta.gov http://wdr.doleta.gov/directives www.workforceatm.org www.nawb.org www.archives.gov www.workforcetools.org/abbreviations.asp www.doleta.gov/sga/pdf/FinalTAG_August_02.pd

8

CHAPTER 2 : FUND DISTRIBUTION/FUNDING PROVISIONS

WIA GRANT AVAILABILITY REQUIREMENTS ALLOCATION OF WIA FUNDS PERIOD OF AVAILABILITY EXPENDITURE/OBLIGATION REQUIREMENTS THIRTY PERCENT OUT-OF-SCHOOL YOUTH EXPENDITURE

REQUIREMENT TRANSFER OF FUNDS REQUEST FOR ADDITIONAL FUNDS DEOBLIGATION OF FUNDS PROGRAM INCOME STAND-IN COSTS

9

WIA GRANT AVAILABILITY REQUIREMENTS Congress appropriates funds for WIA Title I programs by individual funding streams: Adult, Dislocated Worker, and Youth programs. Under the Governor-Secretary Agreement, funds are authorized for expenditure through a grant agreement and associated Notices of Obligation, NOOs. The grant agreement is entered into on a program year (PY) basis between the Governor or the State’s designated representative and the Secretary of Labor or the USDOL Grant Officer. For States, funds are available for expenditure during the Program Year of allotment and the two succeeding Program Years. For local areas, funds are available for the year of allocation plus one succeeding year. Of the funds allotted to Georgia for Adult, Dislocated Worker, and Youth activities, GDOL reserves 15 percent of each funding stream for statewide activities, including 5 percent for State administrative activities. GDOL also reserves 25 percent of the funds available in the Dislocated Worker funding stream for statewide rapid response activities. The remaining funds are allocated to local areas in accordance with WIA Sections 128 and 133 and the regulations at 20 CFR 667.130. With the PY 2002 allocation of adult and youth funds, Georgia implemented 90% hold harmless provision to its adult and youth allocation calculations. Each area’s allocation factor must be at least 90% of the average of the last two years’ allocation factors. ALLOCATION OF WIA FUNDS The Act requires that the State allocate specific percentages of the WIA allotments to local workforce investment areas based upon formula factors specified in the Act. Eighty-five percent of the WIA Title I Adult and Youth funds are distributed to local areas according to methods specified in WIA Section 133(b). Below is a summary of Georgia’s methodology: ADULT FUNDS The standard allocation formula gives equal weight to the following three formula factors: 33.3% Relative number of unemployed individuals in areas of substantial unemployment in each local area, compared to the total number of unemployed individuals in areas of substantial unemployment in the State Relative excess number of unemployed individuals in each local area, compared to the total excess number of unemployed individuals in the State Relative number of disadvantaged adults in each local area, compared to the total number of disadvantaged adults in the State

33.3% 33.3%

YOUTH FUNDS The standard allocation formula gives equal weight to the following three formula factors: 33.3% Relative number of unemployed individuals in areas of substantial unemployment in each local area, compared to the total number of unemployed individuals in all areas of substantial unemployment in the State Relative excess number of unemployed individuals in each local area, compared to the total excess number of unemployed individuals in the State 10

33.3%

33.3%

Relative number of disadvantaged youth in each local area, compared to the total number of disadvantaged youth in the State Georgia has no local areas with rural concentrated employment program grants

Note:

DISLOCATED WORKER FUNDS Georgia distributes 60% of available funds by formula to local areas. Funds are allocated according to the six Federally mandated factors, plus three additional State-determined factors. The factors and their weights are as follows: 40% 05% 10% Number of individuals who received unemployment insurance without earnings, for the most recent six-month period Number of unemployed individuals in excess of 6.5% of the civilian labor force for the most recent six months Number of individuals who received unemployment insurance who were from firms that were part of the Mass Layoff Statistics data for the latest two quarters Number of individuals employed in industries that have experienced a decline in employment of 5% or greater over the last year Number of individuals employed as farmers or rancher according to the most recently available census data Number of individuals who collected unemployment for 15 weeks or more for the last six-month period Number of individuals employed in manufacturing, mining, and agriculture for the last six-month period Number of individuals employed in retail and wholesale trade for the last sixmonth period Number of individuals enrolled in WIA dislocated worker training services during the prior program year

10% 2.5% 2.5% 10% 10% 10%

PERIOD OF AVAILABILITY WIA grant funds allotted to States for a program year are available for expenditure for that program year and the two succeeding program years. In the first year of the State’s allotment, funds allocated to local areas under the State’s WIA allocation formula (generally referred to as formula funds) are available for expenditure during the initial and succeeding program year. WIA operates on a Program Year basis that runs from July 1 through June 30. Federal obligation and spending requirements apply to the total funds allocated for and/or during a Program Year. The determination of whether a local area has met the expenditure and/or obligation requirements discussed later in this chapter is based upon reported expenditures as of June 30. USDOL obligates Program Year funds to States via a Notice of Obligation (NOO) at three different points in time. Program year (PY) adult and dislocated worker formula funds are available on July 1 at the beginning of the program year and end on June 30 of the subsequent year (24 months). Youth funds are made available beginning on April 1, three 11

months prior to the beginning of the program year, and expire on June 30 of the subsequent year (27 months). Fiscal year adult and dislocated worker funds (FY) are available October 1 through June 30 of the following year (21 months). FY funds are part of the Program Year allocation and are included in the June 30 determination of whether obligation and expenditure requirements have been met. The State may also issue statewide activities or rapid response grants based upon need and requests for additional funds. These grants may have a shorter period for expenditure. Also, national emergency grant funds may have a shorter, or longer, expenditure period of availability. EXPENDITURE/OBLIGATION REQUIREMENTS LOCAL EXPENDITURE REQUIREMENTS Local formula funds not expended by an area in the two-year local availability period must be returned to the State. This requirement includes the expenditure of both program and administrative funds. After receipt of the LWIA’s closeout package at the end of the second year of availability, if an LWIA has not fully expended its funds in each of the funding streams, the State will issue a final grant adjustment deobligating the unexpended funds and closing the grant. Funds returned to the State may be awarded to local areas that have fully expended their allocations to support on-going service delivery needs or may be expended in the third year of availability by the State for statewide activities. STATE OBLIGATION REQUIREMENTS WIA requires that the State obligate at least 80% of the allotted program year funds by funding stream by June 30th of the first program year of availability. This obligation requirement includes funds available at the local and State levels. If the 80% obligation requirement is not met, USDOL will deobligate the difference between the actual obligation rate and the 80% target. These funds are deobligated in the subsequent program year allotment. Again, the 80% obligation requirement applies to each funding stream, not total WIA availability. LOCAL OBLIGATION REQUIREMENTS WIA requires that the State establish uniform procedures for the obligation of funds by local areas so that funds allocated to Georgia are not made available for reallocation to other States. In accordance with the provisions of the Workforce Investment Act, the State will deobligate and reallocate local area youth, adult, and dislocated worker funds because of under-obligation of grant funds by an LWIA in the first program year of availability (Sections 128 (c) and 133 (c) of the Act). The amount to be recaptured from a local area because of under-obligation is the amount by which the prior program year’s unobligated balance of formula funds exceeds 20 percent of the year’s allocation. This is generally referred to as the 80% obligation requirement. 12

Unobligated balances are determined based on the local area’s allocations, adjusted for any allowable transfers between the adult and dislocated worker funding streams and for grant availability adjustments due to voluntary deobligation or the award of additional formula funds. Any deobligation for not meeting the 80% requirement excludes administrative funds. The amount to be deobligated is separately determined for each funding stream (20 CFR 667.160(b)). Funds deobligated based upon the 80% obligation requirement must be reallocated to local areas. To be eligible to receive youth, adult or dislocated worker funds under the reallocation procedures, a local area must have obligated at least 80 percent of the prior program year’s allocation, less any amount reserved (up to 10 percent) for the cost of administration. If the State determines the amount recaptured would be immaterial after being reallocated among eligible LWIAs, it may request the LWIAs release the funds to be used by local areas based upon current need not allocation factors. The State may also determine the amount to be deobligated is immaterial and may waive the deobligation requirement. THIRTY PERCENT OUT-OF-SCHOOL YOUTH EXPENDITURE REQUIREMENT WIA requires that at least 30 percent of the youth funds allocated to a Local Area be “used to provide youth activities to out-of-school youth” (WIA Section 129(c4)(A); Final Rule 664.320). The 30 percent requirement applies to the total amount of all youth funds allocated to an LWIA, except for local area expenditures for administrative purposes. Essentially, this means that at least 30 percent of a local area’s youth allocation (adjusted for any recapture or reallocation of funds and reduced for actual administrative expenses) must be spent on outof-school youth activities. Local Areas have two years to comply with this requirement – the year that youth funds are allocated and the succeeding year. If a LWIA uses some of its youth administrative funds for youth program expenditures, the total youth program availability is increased and the 30% out-of-school youth requirement is determined based upon this revised total. The Local Area’s actual out-of-school youth expenditures indicated on their Financial Status Report are compared to the minimum 30% out-of-school youth expenditure level to determine compliance. TRANSFER OF FUNDS Beginning December 2004, LWIAs in the State of Georgia are authorized to transfer up to 30 percent of their Program Year allocation between the adult/dislocated worker programs (TEGL 23-02, April 1, 2003). The State must approve the transfers. No transfers of funds are authorized for the Youth program (20 CFR 667.140). Transferred funds retain their Federal year-of-appropriation identity and must be accounted for and reported accordingly. For example, PY 2004 WIA Title I Adult funds can only be transferred to the PY 2004 WIA Title I Dislocated Worker program. All transfers assume the identity and applicable requirements of the funding stream receiving the transfer. Expenditures associated with the transferred funds do not have to be tracked or accounted for separately. Transferred funds are accounted for and reported as part of the total available funds in the receiving program. Transfer requests must be made in writing to the State via a “Fund Transfer Request Form” (See Form in Appendix F). Transfer requests approved by the State will result in the 13

applicable grants being adjusted to indicate the transfer of funds from and into the respective programs. The issuance of a grant adjustment will serve as the LWIA’s official notification that the transfer is approved. Conversely, LWIAs will receive notification of any transfer request that is not approved by the State. In a related matter concerning applications for National Emergency Grants (NEG) for dislocated workers, Final Rule § 671.130(a)(3) indicates "...a determination has been made, in collaboration with the applicable Local Board(s) and chief elected official(s), that State and local formula dislocated worker funds are inadequate to provide the level of services needed by the workers being laid off." Therefore, LWIAs should be aware that any approved transfer of dislocated worker funds to the adult program may be reviewed by the USDOL as part of a subsequent NEG application. If a LWIA elects to transfer funds between the adult/dislocated worker programs, the transfer excludes submission of a request for additional funds in the funding stream from which funds are being moved unless there is a significant dislocation, statistically significant change in area population, or other major event in the area. An area that has transferred funds from the adult and/dislocated worker funding stream will receive lower priority for receipt of additional funds in the funding stream from which funds were transferred. Underestimating the need for services by a particular target population is not considered an emergency situation. It is expected that areas requesting transfers will have implemented its most in need/limited funds policy for the receiving funding stream prior to the request for transfer of funds. The State expects that any transfer of funds will not adversely impact the: employment and training activities of the program that funds are being transferred from or the program that funds are being transferred to; and WIA Title I performance measures for the Adult or Dislocated Worker programs.

Areas that repeatedly request transfer from one particular funding stream are subject to review of their program design for that program and will receive technical assistance in program design for that target population. More information can be found at WIA Section 133(b) (4); Final Rule § 667.140; Consolidated Appropriations Resolution 2003, and State Policy, dated November 18, 2004. REQUEST FOR ADDITIONAL FUNDS Local Areas which determine that additional funds are needed in a particular funding stream may request additional funds from the Department. Please note that Adult (85%), Youth (85%) and Dislocated Worker (60%) funds are formula-allocated to LWIAs when the funds become available, in accordance with statutory and regulatory requirements. Additional funds will only be available through the Request for Additional Funds process if: Another LWIA voluntarily returns any of these funds; Funds have been involuntarily deobligated from LWIAs because of under expenditure; or Statewide activities (10%) or Rapid Response (25%) funds are not projected to be needed at the State level for WIA staff costs and technical assistance, demonstration 14

grants, or other special projects the Department is undertaking to support and improve WIA services. To request additional funds, a “Request for Additional Funds” form (See Form in Appendix F), must be completed and submitted. In reviewing requests for additional funds, the Department will consider, among others, the following factors: Does the request include clear documentation of need? Are the circumstances/events described in the application supported by appropriate documentation? Is the shortage of funds due to inadequate planning for and tracking of registrations and expenditures by program? Does the LWIA have a waiting list? Has the local area demonstrated adequate planning and financial management? Have expenditures per registrant been close to historical averages? Is the local area managing its registrations for various fund sources adequately or could some individuals be moved to other available fund sources? Did the LWIA implement its most in need/limited funds policy in sufficient time to prevent a projected over expenditure of funds? From an historical perspective, have obligations reported on the FSR materialized into expenditures? Has the local area not been subject to deobligation? Has the local area maintained a good tracking system for ITAs and support costs? Has the area voluntarily deobligated excess funds in the past? What program design efficiencies can be implemented to reduce overall costs? Is the local area willing to implement such changes to existing and future projects? LWIAs may be required to submit additional information. If the Department approves the request, a grant adjustment or grant award will be issued to the LWIA. Issuance of the grant/grant adjustment will serve as the official notification that the Request for Additional Funds has been approved. Local Areas will receive notification of any Request for Funds that is not approved. DEOBLIGATION OF FUNDS The State retains the authority to approve the voluntary deobligation and subsequent redistribution of Title I Adult, Youth, and Dislocated Worker Local Area funds formula allocated to each LWIA under WIA Sections 128 and 133. Specifically, LWIAs may voluntarily request that WIA Title I Adult, Youth, and Dislocated Worker formula allocated funds be deobligated from one or more of their respective program allocations. WIA funds made available as a result of a voluntary deobligation of funds will (1) be provided to other local areas based upon a request for additional funds or (2) be used as part of the process to make funds available from the State and Local Areas to USDOL for purpose of reallotment if the 80% obligation requirement is not met. For reference, voluntarily deobligated funds retain their year-of-appropriation identity and must be accounted for and reported accordingly. Approved requests for the voluntary deobligation of funds will result in the applicable grant being adjusted to indicate the deobligation from the respective program. The issuance of a revised grant will also serve as the LWIA’s official notification that the voluntary 15

deobligation is approved. Conversely, LWIAs will receive notification of any request that is not approved. The specific procedures for submitting a request to voluntarily deobligate funds can be found in Appendix F. PROGRAM INCOME Program income is defined in 29 CFR 97.25(b) as income received which is directly generated by a grant or sub-grant supported activity or earned as a result of the grant or subgrant. Program income includes: 1) income from fees for services performed and from conferences; 2) income from the use or rental of real or personal property acquired with grant or sub grant funds; 3) revenues earned by a governmental or non-profit service provider under either a fixed-price or reimbursable award that are in excess of the actual costs incurred in providing the services; and 4) interest income earned on funds received under WIA Title I. The local area must ensure that sub-recipients and subcontractors are aware that all program income must be accounted for and reported to the local area. Program income must be recorded in the local area’s accounting records and reported to GDOL on the monthly Financial Status Report. Program income may only be expended for allowable purposes under the grant that generated the income. Program income must be expended to expand services under the WIA grant responsible for generating the income. Information on program income can be found at 29 CFR 95.24 and 20 CFR 667.200 (a)(5). EXAMPLES OF PROGRAM INCOME 1. Fee for Services. The One-Stop operator provides pre-employment services for a number of private businesses. There is a per-head fee for these services. The fees are considered program income. 2. User or Rental Fees. The local Job Service has purchased a fax machine with Wagner-Peyser funds and allows usage by Veterans’ program and UI representatives. A per-page fee is charged for such use. The fees are considered program income. 3. Sale of Products. As part of a course on small business development, materials are bought and used to manufacture small items. The proceeds from the sale of these items are considered program income. If the goods produced were written materials, the sales of materials would also be considered program income. 4. Revenues in Excess of Expenditures. A nonprofit youth service provider has a fixedprice contract for the provision of placement services to out-of-school youth. Based on their performance, they have earned revenues that exceed the costs incurred by the organization in providing the services. These revenues are considered program income. 5. Interest Income Earned from Funds. A nonprofit LWIB maintains an interest-bearing account for all grant revenues. The LWIB receives funding from both WIA and nonWIA ETA-funded grants. The interest earned on the WIA revenues would be treated as program income and added to the total WIA grant. The interest earned on nonWIA ETA fund advances would not be considered as program income, but interest 16

amounts over $250 per year would be returned to the Federal government in accordance with the requirements of 29 CFR 95.22. STAND-IN COSTS Stand-In Costs (SIC) are costs that are paid from non-Federal sources. These costs are otherwise allowable but are not reported as Federal Outlays due to Federal funding limitations. If the grant recipient or sub-recipient proposes to substitute the SIC for Federal costs disallowed as a result of an audit or other review the following conditions must be met. In order to be considered as valid substitutions, the Stand-In Costs must be: 1. Reported on the monthly FSR as uncharged costs under the same grant and the same program year in which the disallowed costs were incurred 2. Incurred for allowable WIA activities 3. Accounted for in the financial management system and records maintained. The costs must be treated in a manner consistent with other Federal expenses, to include: a. Supporting documentation b. Actual costs must have been incurred c. Cost allocation and cost classification methodologies, if appropriate 4. Included within the scope of the audit report 5. Exclusions – some examples a. In-kind contributions cannot be used because they cannot be charged to the Federal grant b. Uncompensated overtime c. Unbilled premises costs associated with a fully depreciated publicly owned building d. Allocated costs derived from an improper allocation technology e. Discounts, refunds, rebates f. Any State share of the cost of State or community college tuition

17

CHAPTER 3 : FINANCIAL MANAGEMENT SYSTEM

INTRODUCTION FINANCIAL MANAGEMENT SYSTEM STANDARDS FEDERAL/STATE REPORTING DEFINITIONS ACCRUALS OBLIGATIONS DRAWDOWNS FINANCIAL STATUS REPORTS TOTAL FEDERAL OUTLAYS CONTRACT DEOBLIGATION PROCESS OVERSIGHT & MONITORING

SECTIONS FOR GDOL-MANAGED AREAS ONLY

FEDERAL ACCOUNTING REPORTING SYSTEM FIFO/ADJUSTMENT PROCESS

18

INTRODUCTION The LWIAs’ financial management systems must provide information for Federally required records and reports that are uniform in definition, accessible to authorized Federal and State staff, and verifiable for monitoring, reporting, auditing, program management, and evaluation purposes. In addition, the system must provide for internal controls and accounting procedures that: Are in accordance with generally accepted accounting principles including: • Provision of information pertaining to sub grant and grant awards, obligations, unobligated balances, assets, liabilities, expenditures, and income; • Effective internal controls to safeguard assets and assure their proper use; • Assessment of actual expenditures with budgeted amounts for each sub grant and grant; • Source documentation to support accounting records; and • Proper charging of costs and cost allocation, and Are sufficient to: • Permit preparation of required reports; • Permit the tracing of funds to a level of expenditure adequate to establish that funds have not been spent unlawfully; and • Permit the tracing of program income, potential stand-in costs and other funds that are allowable. Comply with applicable uniform cost principles included in appropriate OMB circulars for the type of entity receiving funds. FINANCIAL MANAGEMENT SYSTEM STANDARDS Both 29 CFR 97.20(b) and 95.21(b) establish a set of standards that must be included in the financial management systems of grantees and sub-grantees. Each of these seven standards is discussed below. FEDERAL REQUIREMENTS Financial Reporting Accurate, current, and complete disclosure of the financial results of WIA grant activities must be made in accordance with GDOL grant reporting requirements. This means that the allowable costs reported to the State must be traceable to accounting records. In addition, all allowable costs and activities must be reported, and the reports must be submitted in the format specified by the Department. For WIA grants, the LWIA must report outlays and obligations on a monthly basis for each open grant. The LWIA must use the web-based Financial Status Reporting System to report cumulative monthly financial activity.

Accounting Records All grantees must keep records that adequately identify WIA grant funds. The records must contain information pertaining to grant and sub grant awards, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. The records must be maintained in accordance with Generally Accepted Accounting Principles (GAAP). Grantees 19

and sub-grantees may use either the cash or the accrual method of accounting; however, expenditures must be reported to the Department on an accrual basis. If the records are maintained on a cash basis, the grantee or sub-grantee must maintain a set of linking records, typically accrual spreadsheets, so that the reported costs are traceable during monitoring or auditing to the official accounting records or books of account. Internal Control Effective control and accountability must be maintained for all grant and sub grant cash, real and personal property, and other assets. Internal controls are designed to provide safeguards for Federal funds. For example, payments may not be authorized solely by an employee who also has the authority to sign checks. Internal controls for property often are inherent in the inventory system that tracks purchases and locations or use of property procured with grant funds. Grantees must adequately safeguard all such property and must assure that it is used solely for authorized grant activities, including shared One-Stop activities. Budget Control Actual expenditures or outlays must be compared with budgeted amounts for each grant or sub grant. This is often referred to as a “planned vs. actual” analysis. The results of such analyses should be used to preclude overspending and/or to modify contracts and agreements. Financial information must be related to performance or productivity data, including the development of unit cost information whenever appropriate or specifically required. This information should be used in developing plans and Financial Management Systems monitoring. Allowable Costs Applicable OMB cost principles, WIA regulations, and the terms of the grant agreement must be followed in determining the reasonableness, allowability, and allocability of costs. Only allowable costs may be charged to a WIA grant, and no WIA grant may pay for more than its fair share of the costs (allocability). This means that the LWIA must determine what costs incurred by the organization are allowable, following the guidelines specified above. Source Documentation Accounting records must be supported by source documentation such as canceled checks, invoices, purchase orders, paid bills, payrolls, time and attendance records, contract and sub grant award documents, tax records, etc. Source documentation is the proof that costs reported to the Department are, in fact, allowable and allocable to the grant. This source documentation must be available for review by USDOL, GDOL and auditors and directly relate to the costs claimed on the FSR. Cash Management Procedures for minimizing the time elapsing between the transfers of funds from GDOL to the LWIA must be followed whenever advance payment procedures are used. When 20

advances are made by electronic transfer of funds methods, the LWIA must forecast cash needs to ensure that cash is received as close as possible to the time of actual disbursement. STATE SUPPLEMENTAL REQUIREMENTS Computer Back-Up As a component of records retention, each LWIA is expected to have a recovery plan in case of computer and/or data failure. Since substantial amounts of information are now being maintained on computerized systems, developing a back-up process in case of local or system failure is necessary. Such a process should include, at a minimum, such items as periodic back-up of data and a system to recover data when a computer malfunction occurs. LWIAs may also consider off-site back-up data storage. The goal of the computer back-up system should be to ensure timely recovery from the event and the ability to maintain a continuous operation. Check Signatory In keeping with sound financial management and safeguarding of assets, all recipients of WIA and State funds must implement the following procedure: Co-signatory agents must be utilized on all checks drawn against these funds; The payee of a check cannot be a co-signatory agent on the same check; and For those organizations such as State agencies, municipalities, and corporations whose check signatory policy is not in compliance with this policy, the Department may grant exceptions upon a written request of a waiver detailing the present policy and an explanation as to why co-signatories are not feasible. Time and Attendance Records The LWIA is required to ensure that all staff involved in the administration of WIA funds and any sub-recipients receiving these funds maintain time and attendance records for all staff involved in WIA and State-funded programs. Staff members must verify these records by their signatures and the signature of their immediate supervisor. In addition, any staff whose time is divided between the two categories (administration and program) must detail the time spent in each category on their time records. Subcontractors must establish and maintain time and attendance records for their staff and for participants in training. LWIAs must monitor and review these sub-recipient records to ensure that the method used meets generally accepted accounting principles. Unclaimed Check Policy Any checks written for the distribution of WIA funds that are unclaimed are subject to the provisions of the Georgia escheat law. Refer to the grant closeout instructions to determine how to handle unclaimed checks. Incident Reporting Procedures OMB Circular A-87 establishes principles for determining allowable costs incurred by governmental units which have received grants. The application of these principles is based 21

on the fundamental premise that governmental units are responsible for efficient and effective administration of Federal awards through the application of sound management practices. Therefore, any activity that raises questions concerning possible illegal expenditures, other unlawful activities, or gross mismanagement of funds should be reported to the Georgia Department of Labor. Individuals may also report such incidents directly to the USDOL Office of Inspector General (OIG). The OIG administers an investigative program to detect and deter fraud, waste, and abuse in USDOL programs. They conduct criminal, civil, and administrative investigations relating to violations of Federal laws or regulations, concerning USDOL. OIG investigations address: Criminal activity Program abuse Employee misconduct Unethical behavior by recipients of resources administered by USDOL, including grant and contract funds. Individuals who provide information on allegations of fraud, waste, abuse, and mismanagement of Federal funds may remain anonymous, ask that their identities be held in confidence, or provide their names, with no restrictions. This confidentiality policy applies to incidents reported to OIG and to the State. FEDERAL/STATE REPORTING DEFINITIONS As stated in the introduction to this section, local area financial management systems must provide information for Federally required records and reports that are uniform in definition. The application of uniform definitions of outlays, accrued expenditures, and obligations at the LWIA and contractor levels has become critical since the inception of WIA. The State and USDOL are concerned that the failure to report accruals and obligations correctly may lead to a loss of funds. Over the past two program years, Congress has rescinded WIA funds that were already awarded to States and LWIAs because of what appears to be a lack of services to customers reflected by an under expenditure of WIA funds. In addition, the proposed expenditure requirement in the WIA reauthorization bill would significantly modify LWIA reporting. It would require that LWIA’s and States expend at least 70% of their total availability (including carryover funds) by funding stream each program year or be subject to deobligation. This would essentially abolish the 80% obligation requirement and move areas and States to just reporting accrued expenditures. Grantees and sub-grantees must report WIA financial activity on an accrual basis, regardless of their basis of accounting, accrual/cash/modified accrual. The objective of this requirement is 1) to ensure that USDOL financial data presented to Congress represents the current and accurate financial position of States and LWIAs, and 2) to ensure that data reported by grantees represents accurate and full disclosure of the program.

22

ACCRUALS At its most simplistic level, an accrual is debt that has been incurred by the agency and must be paid, but has not yet been paid. A service has been rendered or a product ordered and received, but no payment has been made. Expenditures incurred are recognized in the accounting period in which they occur, regardless of whether or not the cash payment is made. On the FSR, obligations and accruals are not the same thing. If the product/service has been delivered, but the invoice has not been paid, the LWIA would report this as an accrual. Accruals may include salaries earned but not paid; participant tuition and books owed, but not paid; utilities used but not paid, etc. LWIAs should not report accruals as obligations on the FSR. LWIAs may estimate their accruals if they have sufficient data to support their estimates. This is especially critical if service providers are generally late submitting invoices to the LWIA for payment. Accruals reported must be reversed or cleared out in the local area’s accrual spreadsheet when paid and included on subsequent reports as cash expenditures. Local entities have 90 days after all funds have been expended or the period of availability has expired to liquidate the accruals recorded during period of performance (TEGL #16-99, Change #1, November 6, 2002)(29 CFR 97.23). Accrued expenditures for the purposes of reporting the local area’s WIA financial status equal actual cash payments, plus the cost of services or goods that have been received or are being provided (e.g. the cost of a semester of tuition that has not been paid but participants are in training). The point at which tuition, books, and fees can legitimately be considered an accrued expenditure depends upon the training institutions published policy and on the payment agreement the LWIA has entered into with the institution. If all monies are due and payable at registration or when class starts, the LWIA can record an accrued expenditure for the total cost unless the payment agreement specifies a different time frame, e.g. payment upon invoicing. ACCRUAL ACCOUNTING The accrual method of accounting recognizes the effects of transactions or events on financial resources of the entity when these transactions take place, regardless of when cash is paid. Expenditures are recognized when the transactions result in a claim against financial resources of the agency. The accrual method of accounting gives a more accurate picture of the financial situation of the agency than the cash method. Even though most LWIAs use a modified accrual or cash accounting basis, FSRs must be prepared reflecting the LWIA cumulative accrued expenditures for the reporting period. ACCRUED EXPENDITURES DEFINED Accrued WIA expenditures include: the sum of actual cash disbursements for direct charges for goods and services, the net increase or decrease in the amounts owed by recipients, 23

goods and other property received for services performed by employees, contractors, sub-grantees, or other payees, and other amounts becoming owed for which no current services or performance is required. Based on the Training & Employment Guidance Letter (TEGL) 2-94, Change 1, dated January 26, 2004, accrued expenditures for the purposes of reporting the local area’s WIA financial status equal actual cash payments, plus the cost of services or goods that have been received or are being provided (e.g. the cost of a semester of tuition that has not been paid but participants are in training). HINTS ON HANDLING ACCRUALS Accruals reported must be reversed or cleared out when paid and included on subsequent reports as cash expenditures. Expenditures incurred must be recognized in the accounting period in which they occur, regardless of whether or not the cash payment is made. Obligations and accruals are not the same thing. Do not report accruals as obligations. OBLIGATIONS Defined at 20 CFR 660.300 as the amounts of orders placed, contracts and sub-grants awarded, goods and services received and similar transactions during a funding period that will require payment by the recipient or a sub-recipient during the same or a future period. Commitments are to be treated the same way as similar commitments of the recipient’s or sub-recipient’s non-WIA funds, whether as obligations or otherwise (20 CFR 652 et al., Workforce Investment Act; Final Rules, II. Summary and Background, pg. 49298). Obligations must be supported by valid purchase orders, contracts, and other binding written agreements. Obligations do not include budgeted cost items such as projected staff cost. The appearance of an item in a budget does not constitute an obligation. According to the USDOL Comptroller General, an obligation is a definite commitment which creates a legal liability. USDOL further states that obligations reported on the FSR are the aggregate of legal commitments made by local grant recipients to pay for future program activities for which an outlay (accrued expenditure) has not yet been recorded in the local entities’ official accounting records. This amount should include the unexpended portion of awards to sub-grantees and contractors. On the final FSR, this line item should be zero. Legal commitments made by local grant recipients are considered an obligation at the local level at the time of legal execution (signed by both parties) of applicable agreement(s). Contract obligations must meet the following criteria: legally binding—offer, acceptance, consideration made by authorized official— consideration is the promise to pay a specific amount in writing a purpose authorized by law properly executed (a contract cannot be considered an obligation unless it has been signed by both parties to the agreement) specific goods, real property, work, or services 24

must contain specific description of goods or services to be acquired otherwise it is not a recordable obligation if quantity is indefinite, e.g. minimum and maximum amount, must use minimum Some examples of obligations include: vendor agreements which specify an amount of funds available for expenditure under the agreement Individual Training Accounts (ITA) with training providers for the cost of occupational skills training Individual Training Account agreements or cost commitment worksheet agreements with participants for the cost of occupational skills training and/or supportive services. To report an ITA agreement as an obligation, the agreement must meet the above criteria. The ITA agreement must identify the eligible individual for whom the commitment has been made, the approved training provider, the training period, the specific courses approved for payment, and the cost of each course and any other fees being obligated for payment. The cost commitment agreement must be signed by the participant and an authorized staff person. Furthermore, it is important to keep in mind that for any obligation, only that portion of the obligation that the grantee has committed to pay from the specific program year grant is considered an obligation against that program year grant. If the period covered by an obligation exceeds the two-year fund availability period of the grant, only that portion of the costs to be paid in the two-year period is considered a WIA obligation. To report ITA commitments as financial obligations, the grantee must have a financial system in place for tracking ITA obligations and for deobligating or increasing the level of committed funds should projected costs change, e.g. participant drops out, tuition increases, etc. The grantee should have procedures in place for regularly updating ITA obligation information reported on the FSR. DRAWDOWNS A Local Workforce Investment Area (LWIA) may request grant award funds in advance from the Georgia Department of Labor (GDOL) to cover upcoming cash expenditures and accruals to be paid within a short period of receipt of the cash. When advances are made by Payment Management System (PMS)/Electronic Funds Transfer (ETF) methods, the grantee must forecast cash needs to ensure that cash is received as close as possible to the time of actual disbursement (One-Stop Comprehensive Financial Management TAG, July 2002). Cash on hand should be limited to the amount needed for immediate disbursement. The frequency of these advance requests is at the option of the LWIA, with a maximum of one per day. Whether or not the LWIA request funds in advance or as reimbursement for prior expenditures depends on the cash resources and cash flow of the LWIA.

When drawing down funds, funds are requested by specific grant award and include program and administrative costs. These funds should be approximately equal to amounts identified in the column labeled “Net Federal Outlays” on the Financial Status Report (FSR) submitted by the LWIA. [NOTE: The FSR includes both cash outlays and accruals.]

25

Worksheets should provide support documentation for both the Request for Drawdown and the FSR. Also, a cash control ledger, or comparable instrument, should be maintained by the LWIA to help avoid excess or shortage of cash on hand. Cash available for disbursement for WIA program purposes, whether from drawdowns, program income, rebates, etc., is considered to be WIA-funded grant cash on hand and should be used by the LWIA before additional funds are requested. Even if the program income is not spent until a later date, the cash associated with that program income must be disbursed before additional cash is requested. The cash proceeds from earned program income should be used immediately for whatever WIA-funded grant disbursement need that exist. LWIAs should not leave cash resulting from earned program income sitting idle in a bank account. FINANCIAL STATUS REPORTS Financial Status Reports (FSRs) are the means by which local areas report accurate, current, and complete financial results for WIA grant activities. FSRs must be completed in accordance with State grant reporting requirements. Allowable costs reported must be traceable to accounting records. In addition, all allowable costs and activities must be reported, and the reports must be submitted in the format specified by the State. USDOL requires that WIA financial reports be made on an accrual basis. The Department requires that FSRs be completed monthly on an accrual basis. If the grantee accounting records are not normally maintained on an accrual basis, the accrual information should be developed through an analysis of the records on hand or on the basis of best estimates and included as expenditures on the FSR. For purposes of submitting the FSR, expenditures should be reported for any WIA grant that has not been officially closed. Even if a grant has been fully expended during the program year, a FSR is due on that grant each month. FSRs should be submitted by the 20th of the month following the report month. However, the automated financial reporting system implemented January 2004 allows some latitude to this requirement. If an LWIA cannot submit their FSRs by the 20th, they should contact the GDOL Grants and Contracts Division to notify the Department as to when these reports can be expected. Drawdowns will be held for those local areas whose reports are not received by the 20th unless other arrangements have been made with Grants and Contracts or with the Special Accounting Division. Local workforce areas should report the cumulative accrued Federal outlays (expenditures), by funding stream, for allowable activities. The youth funding stream is further broken down into outlays for out-of-school youth and in-school youth and for summer employment and other youth activities. The new automated system does not accept cents so all reported expenditures should be rounded to the nearest whole dollar. Unliquidated obligations and the amount of unobligated funds should also be reported by funding streams. Local areas must report obligations monthly. Valid purchase orders, contracts, and other binding written agreements must support obligations. Obligations do not include budgeted cost items such as projected staff cost. The appearance of an item in a budget does not constitute an obligation. 26

Program income, rebates and refunds, and stand-in costs should be reported on the FSR on a monthly basis. It is essential that stand-in costs be reported in the program year in which they are earned in order to be used in lieu of any disallowed costs from that program year. Program income, rebates and refunds, and stand-in costs should be reported on the FSR for the reporting period in which they are earned/received/used instead of at the end of the program year or the end of the grant period. GDOL has developed an automated web-enabled FSR reporting system. The system went into operation for the January 2004 reporting period. This is the initial phase of the system and is basically data entry and electronic transmission. Data compilation and analysis will be addressed during phase two planned for 2005. To access the new system, visit http://www.dol.state.ga.us (Workforce Professionals/More/Report WIA Financial Information). TOTAL FEDERAL OUTLAYS Total Federal outlays as reported on the Financial Status Report (FSR) are the sum of actual cash disbursements for direct charges for goods and services, the amount of indirect expense incurred, plus the net increase or decrease in the amounts owed by the local grant recipient for goods and other property received; for services performed by employees, contractors, sub-grantees, and other payees, and other amounts becoming owed for which no current services or performance is required, such as, annuities, insurance claims, and other benefit payments. In other words, LWIAs should report the sum of their cumulative actual cash disbursements and their accruals. Total Federal outlays may also be called accrued expenditures (cash disbursements plus accruals). CONTRACT DEOBLIGATION PROCESS The Georgia Department of Labor requires a deobligation notice on contracts no later than 90 days after a contract ends from all LWIAs that contract with GDOL as well as all GDOLmanaged areas. The deobligation notice should be sent via email to the GDOL Special Accounting Unit’s Supervisor. OVERSIGHT & MONITORING An awarding entity may review the adequacy of the administrative and financial management system of any grantee/sub-grantee as part of a pre-award review or any time subsequent to the grant award. Processes and procedures should be documented in manuals or policy directives that clearly state exactly how the grantee/sub-grantee will adhere to the Federal/State/local requirements. From the beginning of WIA implementation in July 2000, the State of Georgia has worked to ensure local Workforce Investment Boards and chief local elected officials have the maximum flexibility allowed by Federal law and regulations in designing and implementing workforce development systems that meet the needs of their communities. USDOL issued 13 different sets of regulations to govern the implementation of WIA. References for these regulations can be found at 20 CFR 667.400 and 29 CFR Parts 95 and 97. The State has developed and implemented minimal additional State policies to supplement Federal guidance, primarily when required to do so by the law or regulations. 27

The State has not substituted its judgment for that of local areas, unless the matter was primarily a State concern. Generally, if the Act or regulations do not prohibit a particular practice, workforce areas have been encouraged to develop local policy to address issues. In addition to providing minimal State policy, the State has interpreted and clarified the Act and regulations for local workforce areas and has provided guidance in the form of suggestions, advice, factors to consider, and opinions to aid in the development of local policy. The State recommends that local areas have the following regarding oversight and monitoring: a written policy and process for consistent review of subcontractor/sub-recipient operations including One-Stop management and youth activities; a formal schedule for the conduct of reviews to ensure that oversight is conducted on an annual basis; and a review process that covers all fiscal and administrative compliance requirements Periodic program reviews will assess the strength and quality of local systems and provide/identify opportunities for continuous improvement, as well as ensure compliance with Federal, State, and local requirements. Georgia’s oversight system includes performance, compliance, and programmatic aspects. These components are addressed through technical assistance and more formalized system monitoring.

GDOL-MANAGED AREAS ONLY

FEDERAL ACCOUNTING REPORTING SYSTEM The Financial Division of the Georgia Department of Labor uses the Federal Accounting Reporting System (FARS) for its accounting needs. The FARS system provides for all accounting activities including but not limited to the following: Budget set-up and management according to agency-specific planning, cycling, and reporting requirements Accounts payable/purchase order processing for requisitions, orders, invoices, and disbursements User management of accounts receivable billing, payments from customers, waivers, and compromises; Accurate, effective financial reporting, based on information in the FARS database FARS also generates a daily record of all GDOL fund ledgers reporting availability and expenditures. The Status of Obligational Authority Reports, known as GA-17 and GA-17B, are retrievable from FARS SRPT application [Report/Data Archives & Retrievable System (RDARS)]. GDOL-managed local areas should reconcile its in-house books and Financial Status Reports to the GA-17 on a monthly basis. 28

GDOL-managed local areas receive reports via online printers at the close of the accounting period, approximately the 24th of the month following the end of the report period, from assigned staff in Special Accounting. Reports generated from FARS should be used to prepare the monthly WIA FSRs. Examples of reports can be found in Appendix D. Reports as described as follows: Report 1 – Listing by grant types (e.g. adult, youth, dislocated worker) Shows availability, expenditures, and balance Data rolls into Report 2 except for Pools Report 2 – Listing of individual grant by funding year Data should be used by local area to prepare Financial Status Reports (add accruals to Report 2 for FSRs) Report 5 – Detail of Direct Cost Lists invoices paid in that month FIFO/ADJUSTMENT PROCESS AT CENTRAL OFFICE FIFOs and Adjustments requested from the local areas are processed at the Central Office as follows: 1. Requests for Adjustments and FIFOs are received by staff in the Special Accounting Unit. 2. Staff approves requests; journal entries are prepared and verified by the Special Accounting Supervisor. 3. Journal entries are then forwarded on to the General Accounting Unit. 4. Staff in the General Accounting Unit posts all journal entries into the FARS accounting system. 5. General Accounting Unit staff verifies the journal entries posted into FARS. 6. FARS GA-17 Report is generated daily. All posted transactions will show up on this report. 7. Special Accounting Unit staff verifies the balance and expenditures posted on the FARS GA-17 Report to ensure journal entries were posted correctly. 8. If corrective action necessary, Special Accounting staff will prepare journal entries to correct any errors in previous entry. 9. GDOL managed local areas should use the FARS GA-17 to check all FIFOs and Adjustments have been posted correctly to the affected fund ledgers. To keep the difference in FIFOs and Adjustments clear, the GDOL have established definitions for each and are attaching FIFO worksheets and Adjustment worksheets to use when submitting journal entries to the Central Office (See Appendix E). “First In/First Out” or FIFO simply means that the LWIA should pay allowable costs using the oldest available grant funds before using more recent grant funds. Journal entries submitted to Central Office for FIFOs should be submitted separately from other batches of journal entries. Adjustments are correcting entries that amend the errors made in previous entries. Also adjusting entries should be made to reconcile cost pool allocations. Adjustments should be submitted separately from other batches of journal entries to the Central Office. Submissions of FIFOs by a LWIA to the Central Office will only be made once a quarter, and Adjustments will only be made once a month. 29

CHAPTER 4 : ALLOWABLE COSTS
ADMINISTRATIVE COSTS PROGRAM COSTS SUMMARY OF ALLOWABLE COSTS DISALLOWED COSTS

30

ADMINISTRATIVE COSTS Per 20 CFR 667.200, the costs of administration are the allocable portions of necessary, reasonable, and allowable costs that are associated with specific functions not related to the direct provision of workforce investment services, including services to participants and employers. These costs can be both personnel and non-personnel and both direct and indirect. The costs of administration are the costs associated with performing the following functions: Performing the following overall general administrative functions and coordination of those functions under WIA Title I: • Accounting, budgeting, financial and cash management functions • Procurement and purchasing functions • Property management functions • Personnel management functions • Payroll functions • Coordinating the resolution of findings arising from audits, reviews, investigations, and incident reports, audit functions, general ledger services functions, and developing systems and procedures including information systems required for these administrative functions • Audit functions • General ledger functions • Developing systems and procedures, including information systems, required for these administrative functions. Performing oversight and monitoring responsibilities related to WIA administrative functions Costs of goods and services required for administrative functions of the program, including goods and services such as rental or purchase of equipment, utilities, office supplies, postage, and rental and maintenance of office space Travel costs incurred for official business in carrying out administrative activities or the overall management of the WIA system Costs of information systems related to administrative functions including the purchase, systems development, and operating costs of such systems Awards to sub-recipients or vendors that are solely for the performance of administrative functions are classified as administrative costs. Personnel and related non-personnel costs of staff that perform both administrative functions and programmatic services or activities must be allocated as administrative or program costs to the benefiting cost objectives/categories based on the chosen cost allocation method. Documentation of such charges must be maintained. PROGRAM COSTS All costs incurred for functions and activities of sub-recipients and vendors are program costs, EXCEPT for awards to the sub-recipients or vendors that are solely for the performance of administrative functions. Costs of the following information systems including the purchase, systems development, and operating costs are charged to the program category and all documentation of such charges must be maintained: Tracking or monitoring of participant and performance information 31

Employment statistics information, including job listing information, job skills information, and demand occupation information Performance and program costs information on eligible providers of training services, youth activities, and appropriate education activities Local area performance information Information relating to supportive services and unemployment insurance claims for program participants Continuous improvement activities are charged to administration or program category based on the purpose or nature of the activity to be improved. SUMMARY OF ALLOWABLE COSTS Personnel and related non-personnel of staff who perform both administrative and programmatic functions must be allocated to the appropriate category based on documented distributions of actual time worked or other equitable cost allocation methods. Examples of Administrative Costs 1. Accounting 2. Budgeting 3. Cash Management 4. Financial Management 5. General Ledger functions 6. Audit functions 7. Resolution of findings from audits, reviews, investigations, and incident reports 8. Procurement 9. Purchasing 10. Payroll 11. Information Systems – purchase, development, and operation 12. General Legal Services 13. Travel costs for official business of the WIA system 14. Cost of goods and services required for administrative functions 15. Oversight and monitoring responsibilities related to WIA administrative functions 16. Administrative Overhead Examples of Programmatic Costs 1. Case Management 2. Initial Assessment 3. Eligibility Determination 4. Information Systems costs related to programmatic functions – purchase, development, and operation (20 CFR 667.220(c)(5)) 5. Placement Staff 6. OJT Training 7. Tuition 8. Support Services a. Child Care b. Family Planning and Counseling c. Transportation

32

DISALLOWED COSTS Sections 20 CFR 667.260 through 20 CFR 667.269 describes costs that are generally not acceptable as WIA expenditures. WIA funds may not be expended for the following activities: Public service employment, except to provide disaster relief employment, as specifically authorized in 20 CFR 667.264 Relocation of a business or part of a business that results in the loss of employment at the original location Employment generating and similar activities if not related to training for eligible individuals Sectarian activities Foreign travel Political activities Duplication of facilities/services available in the area Employment or training of participants in sectarian activities Participants cannot be charged a fee for placement or referral into a training or other WIA funded program Wages of incumbent employees during participation in economic development activities as addressed in 20 CFR 667.262 Displacement of employees by any WIA participants The promotion or deterrence of union organizing The construction or purchase of facilities or buildings All those unallowable activities in the applicable OMB Circular A-87 and/or OMB Circular A-122 For direct non-formula recipients only, consultant fees in excess of $450.00 per day WIA funds may not be spent on employment-generating activities, economic development, and other similar activities, unless they are directly related to training for eligible individuals. Examples of employer outreach and job development activities directly related to training for eligible individuals are listed in section 20 CFR 667.262 of the regulations.

33

CHAPTER 5 : COST ALLOCATION AND COST POOLING

INTRODUCTION TYPES OF POOLS COST POOL MANAGEMENT ALLOCATION BASES

SECTIONS FOR GDOL-MANAGED AREAS ONLY PROCEDURE FOR COST POOLS

34

INTRODUCTION Costs that are not readily chargeable to a final cost objective are often aggregated into intermediate cost objectives, usually called cost pools, and are periodically allocated to final cost objectives using an appropriate allocation methodology. Cost pools can be established for any type of cost when it is beneficial or necessary to pool costs. All pooled costs must ultimately be allocated to the final cost objectives in proportion to the relative benefits received by each cost objective. Costs should only be pooled when they cannot be identified and reported directly. TYPES OF POOLS ADMINISTRATIVE COST POOLS. One of the benefits of an administrative cost pool is that, very often, administrative costs benefit multiple programs, and the effort of directly classifying portions of a cost to a number of programs is tedious. The allocation of administrative costs or any other pooled costs based on fund availability or percentage of funding source administrative dollars is generally not allowable. The allocation of pooled administrative costs based on each program’s share of direct costs is the best, but not the only, method. The Director of Special Accounting should be contacted for technical assistance and concurrence on any methodology developed. The USDOL allows for formula administrative funds to be allocated to the local level in a single combined grant and costs to be reported without regard to funding stream, therefore, an administrative cost pool may not be needed. However, the State of Georgia allocates administrative funds with program funds in a single grant and the administrative funds from all funding streams may be combined. OTHER COST POOLS. Cost pools other than administrative can be established for any types of common costs when it is practical or necessary to pool such costs. COST POOL MANAGEMENT Cost pools reduce some of the burden of tracking expenditures because they are vehicles for temporarily accumulating unassignable direct and indirect costs that later will be allocated to a particular program. As costs accrue, a formula based on the benefits received by each program dictates how these costs will be distributed and reported by program title/subtitle or cost category. This eliminates trying to assign all staff time and every expenditure by grant type at the time it is incurred. ALLOCATION BASES When costs are pooled instead of being directly assigned to a final cost objective, the ability to directly assign benefit for each item of cost is lost. Instead, the pool contains a group of common costs to be allocated by using an indirect or approximate measure of benefit. The approximate measure of benefit is the allocation base. An allocation base is the method of documentation used to measure the extent of benefits received when allocating joint costs among multiple cost objectives. Many different types of bases can be used in allocating costs. The most appropriate base will vary with the circumstances prevailing in each instance. An organization is likely to use several different bases for allocating different types of costs. Acceptable methods for distributing pooled costs may vary by type of organization, functional units or levels within 35

an organization, types of cost to be allocated, and cost category. The basis used to allocate a particular type of cost should be used consistently over time and be described in the Cost Allocation Plan. A copy of the initial Cost Allocation Plan and all subsequent modifications to the plan should be sent to the GDOL Grants Audit Unit.

FOR GDOL-MANAGED AREAS ONLY

PROCEDURE FOR COST POOLS Each GDOL-managed local area will be allowed to choose its own cost allocation method (i.e. enrollments, hours, etc); however, this method should be submitted to and reviewed by the GDOL Grants Audit Unit. Cost pool adjustments will be made on a monthly basis. The procedure for allocating cost pools is as follows: 1. Pull Cost Pool Report at the time that General Accounting, located at Central Office, runs FCAT allocation (FARS Cost Allocation Table) each month. 2. LWIA will use Report 1 as basis for cost pool allocation. 3. Use spreadsheet to calculate allocations (example provided) 4. Forward to assigned Special Accounting Unit staff to prepare journal entry 5. Submit journal entry to General Accounting Unit 6. Staff in the General Accounting Unit will post all journal entries into the FARS accounting system. 7. General Accounting Unit staff will verify all transactions posted into FARS. 8. Special Accounting Unit staff will verify the balance and expenditures posted on the GA-17 report to ensure accuracy of entries. 9. If corrective action is necessary, Special Accounting Unit staff will prepare journal entries to correct any errors in the previous entry. 10. GDOL-managed local areas should use the FARS GA-17 (i.e. Cost Pool Reports) to check all cost pool adjustments that have been posted correctly to the affected fund ledgers.

36

CHAPTER 6 : FINANCIAL REPORTING SYSTEMS AND FORMS

FINANCIAL STATUS REPORTING SYSTEM DRAWDOWN SYSTEM VOLUNTARY DEOBLIGATION FUND TRANSFERS REQUEST FOR ADDITIONAL FUNDS WIA FINANCIAL CLOSEOUT

37

FINANCIAL STATUS REPORTING SYSTEM GDOL has developed an automated, web-enabled FSR reporting system. The system went into operation for the January 2004 reporting period. This is the initial phase of the system and is basically data entry for and electronic transmission of FSRs. Further development of the web-enabled system has begun and will continue throughout 2005. The system will eventually become a complete grants/financial management system for WIA funds. The expanded version of the system will address data compilation and analysis and automated closeout, drawdown requests, requests for additional funds and transfer of funds. To access the FSR reporting system, visit http://www.dol.state.ga.us (Workforce Professionals/More/Report WIA Financial Information). AUTHORIZED ACCESS BY STATE AND LWIA PERSONNEL There are three general categories of “authorized” users to the current FSRS system including: 1) fiscal personnel from the Local Workforce Investment Areas, 2) LWIA directors and 3) GDOL financial and program staff. As the system is expanded, additional authorized users may be necessary including LWIB directors and CEOs. In addition, there are three levels of access to the current system: inquiry, entry, and approval/submission. The level of access and the area information that can be accessed by authorized users is primarily determined by their function e.g.. Special Accounting staff may need access to all areas’ data, while an LWIA director would only need access to their own area’s data. User Ids and passwords must not be shared with other staff. Violation of this requirement may result in future access being denied. As more functions are added to the FSRS, security becomes a higher priority. LWIA directors must request access to the system for new staff (see Appendix F for the form) and must request deactivation of access for staff no longer needing access to the system. Grants and Contracts has responsibility for system security and requests for access and deactivation should be sent to this unit. A training manual for the FSRS is included in Appendix B to this TAG. It will be updated on an ongoing basis to reflect changes and enhancements to the system as they occur. DISABLING ACCESS To disable a current system user, a Local Workforce Investment Area should submit an email request to Dianne Sanders at dianne.sanders@dol.state.ga.us. The request should be submitted within one week after termination of employment or movement to a position not authorized for access. Complete instructions for the Financial Status Reporting System can be found in Appendix B. Each local area must complete a Request for Access to Financial Status Reports Form which gives access to the FSR Reporting System (See Attached Form in Appendix F). A form must be submitted for each person within the office who desires access to the reporting system. It is recommended that each local area designate someone to enter the financial data in the FSR Reporting System and then the director or other appointed supervisor to be designated to approve and submit to GDOL.

38

DRAWDOWN SYSTEM CURRENT SYSTEM An original “Request for Drawdown of WIA Funds” form must be submitted to the State office each time a recipient wishes to draw down funds (See Attached Form in Appendix F). A request to draw down funds must be faxed to the Georgia Department of Labor Finance Division by 9:00 a.m. to receive funds the following day. FUTURE AUTOMATED SYSTEM The Georgia Department of Labor is currently working on the implementation of an automated drawdown system as part of the WIA automated financial management system. The automated drawdown system will seek to streamline the process of requesting and receiving WIA funds and will add to accuracy of the system information. VOLUNTARY DEOBLIGATION A LWIA may request a voluntary deobligation of WIA funds by submitting a formal letter to the Georgia Department of Labor (See Attached Form in Appendix F). Requests for voluntary deobligation of funds should be made by the individual designated to sign grants for the local area. The GDOL will be automating this process during 2005. FUND TRANSFERS The Workforce Investment Act, Final Regulations, and PY2003 appropriation, addressed in Training and Employment Guidance Letter No. 23-02, established that a local Board may transfer up to 30% of the total formula funds allocated to a LWIA for a program/fiscal year between adult and dislocated worker grants. A Fund Transfer Request Form (See Attached Form in Appendix F) must be completed by the LWIA and submitted to the Grants and Contracts Division when a transfer of funds is desired. The request will be processed within 10 working days. The review committee that evaluates additional funds requests will also process requests for fund transfers. The transfer process will also be part of the automation effort in 2005. REQUEST FOR ADDITIONAL FUNDS Request for Additional Funds must be submitted and signed by the LWIA Director and a separate application for each fund source is required (See Attached Form in Appendix F). The Application for Additional Funds requires information on the needs of the local area and why additional funds are needed. The following are examples of the information required on the form: Number of current WIA registrants receiving training and/or supportive services Number of current WIA registrants receiving other services Projected number of new customers who will receive training/supportive services Projected number of new customers who will receive other services. Other funding secured to supplement existing WIA allocation 39

The Georgia Department of Labor is working to automate the Request for Additional Funds. The automation of this system will help to streamline the process from the initial request to the receipt of funds. The projected roll out date of the automated system is Fall 2005. WIA FINANCIAL CLOSEOUT The purpose of the Financial Closeout Package is to reconcile reported expenditures to cash drawdowns and to release the LWIA from further financial obligation under the grant. Again, the GDOL is working on automating this process to reduce errors and to streamline the system. A Financial Closeout Package must be submitted to GDOL within 45 days after the expiration of the grant (for each funding stream) for the following: WIA Adult Program Grants, WIA Youth Activities Grants, WIA Dislocated Workers Grants, National Emergency Grants, and Statewide Activity Grants including Adult, Youth, Dislocated Worker, and Rapid Response. GDOL managed local areas should reconcile its in-house books to the FARS GA17 to ensure accuracy in the closeout process. The following forms make up the closeout package: Recipient’s Grant Release and Release to the State – This form releases the State from further obligation beyond the costs reported in the closeout package. It is the instrument used to make final financial disclosures. Financial Closeout Statement – This form reconciles cash received with cash disbursed (expenditures) during the lifetime of the grant. Final Financial Status Report (FSR) – This form is an accounting of cumulative grant expenditures by cost category (administration and program) for the lifetime of the grant. Outstanding Accruals Register – This form lists unpaid accruals that have not been paid at the time the closeout package is submitted to GDOL. Accruals must be paid no later than 90 days after the expiration of the grant. Outstanding Wage Check Register – This form lists the individuals whose wage or support checks have not cleared the bank by the time the closeout package is submitted to GDOL. Georgia’s escheat law requires that all unclaimed wages be submitted to the State. These funds should have been reported as expensed. These funds may be returned to the LWIA upon the LWIA’s, wage earner’s and/or support recipient’s request. Refund Register – This form lists refunds that reduce WIA cash drawdowns and the amounts reported as the WIA share of expenditures on the FSR. Inventory Certificate – This form certifies that the inventory schedule accurately lists all equipment that has been purchased to date with the WIA funds and has been reconciled to the physical inventory and asset account. Inventory List – This form lists the equipment purchased by the grant that cost more than $1,000 (State policy). Only one inventory list should be submitted for all of the PY and FY Closeout Packages. A Financial Closeout Package may be submitted to GDOL prior to its expiration date if all funds have been expended, audited, and all findings (if any) have been resolved.

40

CHAPTER 7 : PROCUREMENT & PROPERTY MANAGEMENT

PROCUREMENT POLICIES & PROCEDURES PROCUREMENT METHODS PERFORMANCE-BASED CONTRACTS REQUIRED CONTRACT CLAUSES PROCURING AN AUDIT EQUIPMENT AND RELATED REQUIREMENTS

41

PROCUREMENT POLICIES & PROCEDURES The requirements pertaining to the procurement for State and local governmental grantees and sub-grantees of goods and services are listed in 29 CFR 97.36. States are required to follow the same policies and procedures they employ for procurements using non-Federal funds. In addition, they are required to ensure that all Federally required clauses are included in all purchase orders and other agreements. All other governmental grantees and subgrantees are required to follow the requirements of 29 CFR 97.36 (b) through (i). The purpose of procurement policy and procedures is to ensure that all procurement transactions are conducted in a manner providing full and open competition. GENERAL PROCUREMENT REQUIREMENTS The requirements of 29 CFR 97 explain that grantees and sub-grantees will use their own procurement procedures which reflect applicable State and local laws and regulations, provided the procurements conform to applicable Federal law and standards. Grantees and sub-grantees should: Maintain a contract administration system which ensures that contractors perform in accordance with the terms and conditions of their contract Maintain a written code of conduct governing the performance of employees involved in the award and administration of contracts; such a code of conduct should address the need for employees and board members not to engage in the procurement process if a conflict of interest, real or apparent, would be involved (See the definition of “immediate family” at 667.200(a)(4)(i), and as defined by the State). Review proposed procurement to avoid purchase of unnecessary or duplicative items Consider consolidating or breaking out procurements to obtain more economical purchases Where appropriate, analyze lease vs. purchase alternatives Enter into State and local governmental agreements for procurement where feasible Use Federal excess and surplus property when possible Make awards only to responsible contractors possessing the ability to perform successfully under the terms of the contract Consider the following: o Contractor integrity o Compliance with public policy o Record of past performance o Financial and technical resources Grantees and sub-grantees will be solely responsible, in accordance with good administrative practice and sound business judgment, for settlement of all contractual and administrative issues arising out of procurements; Federal agencies will not substitute their judgment for that of the grantee or sub-grantee unless the matter is primarily a Federal concern Maintain records sufficient to detail the significant history of a procurement, including o Rationale for method of procurement o Selection of contract type o Contractor selection or rejection o Basis for the contract type Have grievance procedures to handle and resolve disputes relating to procurement 42

Have written selection procedures that ensure all solicitations o Incorporate a clear and accurate description of the technical requirements for the product or service being procured o Identify all requirements which the offerors must fulfill and all factors to be used in evaluation bids or proposals o Ensure all prequalified lists of persons, firms, or products are current and include enough qualified sources for maximum open and free competition PROCUREMENT METHODS Section 29 CFR 97.36 specifies that all procurement actions are to be conducted in a manner that provides for “full and open competition.” Within the context of open competition, four methods are discussed in 29 CFR 97.36(d) by which agencies may procure goods and services. The four methods of procurement are small purchase, sealed bids, competitive proposals, and non-competitive procurement. SMALL PURCHASE. This is a relatively informal method used primarily to procure goods (supplies and equipment). This method is appropriate only when price is the overriding factor and may be easily quoted and compared, delivery is standardized, and performance outcomes are not dependent upon the content of the goods being procured. While the Federal threshold for small purchase is currently $100,000 [(41 U.S.C 403(11)], it is State policy that acquisitions involving expenditures of less than $2,500 do not require formal bids on bidder letterhead. A minimum number of bids is not required, although more than one quotation should be obtained when practical, and three bids are recommended. If not practical, the purchaser should document the circumstances that make it impractical. If the purchase is to be sole sourced, the purchaser should document the circumstances that make sole source the only option. Acquisitions involving expenditures of $2,500 or more, but less than $100,000 should be made by solicitation of informal competitive written bids/proposals, whenever practical, or by telephone bids or fax bids/proposals. At least three quotes are required. Organizations using WIA funds to procure goods and services should check the appropriate circulars for their organization and should check their organization’s internal policies and procedures for more stringent small purchase thresholds and requirements. EXAMPLE: The agency has a need for automobiles. It compares the prices at three different sources and makes a selection based on price. SEALED BIDS. Under sealed bid procedures, bids are publicly solicited, and the procurement is awarded to the lowest bidder, resulting in a fixed-price (either lump sum or unit price) contract. In order for this process to be feasible, three conditions must be met: Complete, adequate, realistic specifications or purchase description Two or more responsible bidders are willing and able to compete The procurement lends itself to a firm, fixed-price contract EXAMPLE: The organization is looking to procure computer hardware, including printers, and peripheral hardware needed for establishing a network at the One-Stop. The exact specifications for the computer hardware, including numbers and required capacity, are contained in the Invitation for Bid (IFB), published in the local 43

newspaper, and sent to prospective suppliers. The award is fixed-price contract to the lowest responsible and responsive bidder. COMPETITVE PROPOSALS. Competitive proposals are used when there is more than one prospective bidder, the lowest price is not necessarily the determining factor for award, and either a fixed-price or cost-reimbursement agreement will be awarded. The competitive proposal method also meets the standards for “full and open competition” and is appropriate when the agency seeking goods or services is looking for a variety of methods that may be employed to achieve the results called for in the Request for Proposal (RFP). Often, the evaluation factors will focus on approach, program design, innovation, coordination, and experience. Procurement by competitive proposal should be used when the following conditions exist: There are two or more sources capable of submitting an offer Either a fixed-price or cost-reimbursement contract will be used Conditions are not appropriate for sealed bids EXAMPLE: An RFP is issued for prospective providers of training services for WIA Title IB Youth participants. The RFP is published and the submitted proposals are reviewed for responsiveness to RFP specifications, proposed performance criteria, and costs. Awards may be made to more than one successful bidder, and either fixedprice and cost-reimbursement contracts may be awarded, depending on the uniformity and predictability among individual providers and such factors as occupations, pay rates, number of training hours, etc. NON-COMPETITIVE PROPOSALS. This method is the solicitation of a proposal from a single source, or, after solicitation of a number of sources, competition is determined inadequate to fulfill the requirements of the funding agency. Cost analysis, e.g. verifying the proposed cost data, the projections data, and the evaluation of specific elements of costs and profits, is required. Pre-approval of the proposed procurement by the State is generally not required. Depending on the circumstances, however, the procuring agency may be required to submit the proposed procurement to the awarding agency for pre-award review, for example, if the State determines, through a program review, that the local area’s procurement system does not meet requirements. Non-competitive procurements are allowable under 29 CFR 97.36, but they are considered a “last resort” option and used only when there is a documented reason for sole source selection. Therefore, grantees should ensure that the competitive process is open and fair. They must exercise caution when using non-competitive procurements. EXAMPLE: An LWIB solicits proposals for the provision of youth services in a rural area, and only one bid is received. Rather than change the specifications and re-issue the RFP, the organization may enter into an agreement with the single bidder. Documentation to support the decision will be required, i.e., cost analysis documentation that other procurement methods are infeasible and the awarding agency (the State) has approved the procurement. If required by the awarding agency, such an agreement would have to be approved by the awarding agency prior to execution.

44

PERFORMANCE-BASED CONTRACTS Performance-based contracts (PBC) are so structured so that payments are earned only with delivery of the agreed, precisely defined, measurable outcome(s). Under PBCs, there is no obligation to pay the awardee unless satisfactory delivery is achieved, unlike cost reimbursement contracts. The cost reimbursement agreements contain line item budgets and base their cost claims on “best efforts” to attain the intended results. The attraction of PBCs stems not only from this no-results/nonpayment feature, but also from the fact that risk, responsibility, and approach are primarily the burden of the contractor, thereby lessening the amount of required grantor oversight. Efficient, effective delivery would be expected to enhance the margin of earnings in excess of the awardee’s costs, while poor performance could mean the awardee would experience a significant financial loss. However, the WIA regulations specify that for nonprofit or governmental organizations, the excess revenue over the costs must be treated as program income. The Employment & Training Administration (ETA) and its regulations provide no specific guidance on the topic of performance contracting. However, the procurement requirements of 29 CFR Parts 95 and 97 require that, for costs to be allowable, they must be reasonable and necessary procurements must be competitive (and qualifying exceptions to full and open competition must be justified) and not reflect conflict of interest documentation of the procurement process must include bases for source selection and pricing. In addition, costs incurred under the various ETA grant programs are required to be allocated among the specified cost categories or funding sources in accordance with benefits received. Equitable assignment of costs among benefiting cost categories has historically been a challenge for most fixed-price agreements. One solution to the problems of how to ensure reasonable pricing and proper allocation of costs among the cost categories for PBCs would require the following: Thorough cost/price analysis in accordance with Parts 95 and 97. Such analysis would be done from a line item budget provided by the offeror that (a) reflected resource inputs distributed among cost categories, and (b) resulted in a reasonable cost/price analysis conclusion by the grantor, including the assignment of resource inputs to proper cost categories. This cost/price analysis would be documented and subject to review The offeror would have certified in writing that its cost and pricing data were accurate, complete, and current to the best of its knowledge at the time of submission. Costs incurred under such an agreement would then be allocated among the benefiting cost categories based on the ratios established in the cost/price analysis. As stated, this is a proper solution to the problems associated with allocating costs. Other solutions may be available to the grantee; however, caution must be exercised to ensure adherence to the procurement requirements of Parts 95 and 97 as well as the cost principles contained in the appropriate OMB circulars. PBCs for the purchase of training services are vulnerable to several kinds of problems. Under WIA programs, this may be more of an issue with the Youth programs where all services must be contracted. The Adult and Dislocated Worker programs use Individual Training 45

Accounts to fund training services, for the most part; however, most intensive services are contracted as on-the-job training (OJT) and specially developed training services. Therefore, any awarding agencies that choose to use this form of agreement should be alert to avoid some of the more common hazards: Benchmarks. To moderate what otherwise might be an unacceptably high risk potential faced by PBC awardees, these contracts are frequently structured to provide separate payment points, each compensating for some documented unit or increment of progress toward achievement of the ultimate contract objective. The dollar value assigned to each of these payment points should ensure that the contractor cannot recoup its costs before the final objective is achieved. Furthermore, the work should be benchmarked so that sufficient funds are held back to encourage full performance. The performance being rewarded should focus on the participant’s achievement. Thus, the process of enrolling a participant should not be identified as an incremental payment point if enrollment is primarily an achievement of the contractor, not the participant. Finally, it should be recognized that fragmenting the units of delivery into smaller and smaller increments diminishes the risk that is presumed to exist when pricing this form of agreement. Example: Successfully reaching mid-point of a training course (documented by mid-term grades) is defined in the contract as a partial or incremental payment point, with completion of the training defined as another incremental payment point, and training-related placement, still another. Additional compensation is sometimes paid for placements into jobs paying wage rates above prescribed levels. In this example, the benchmarks are structured to reward achievement by the participant. Umbrella Contracts. Similar performance can frequently be attained from very different levels of effort or forms of program intervention. Recognition of this possibility should result in clearly listing and separately pricing performance outcomes attributable to different methods of delivery. When an agreement structures delivery under such an umbrella of opportunities, it is imperative that each kind of intervention be separately recognized and separately priced. Example: An agency compensates all placements at a fixed amount ($800 each). The agency should be prepared to receive varying results if it has written an “umbrella” contract that permits placements to result from different program activities. If the contract includes OJT, job search assistance (JSA), customized maturity skills/pre-vocational intensive services, and post-secondary individual referral slotting into vocational training, and each of these activities could result in placement of individuals enrolled in them, then the structuring of delivery in this manner encourages primarily the short-term, low-cost forms of intervention. Therefore, while the grantor agency might think it had priced delivery to reflect success from a balanced mix of activities, the inducement for the contractor seeking to maximize profit would be to overload enrollment in the two-week JSA course in order to ensure the lowest possible cost per placement. 46

Control of the Applicant Pool. Performance-based contracts should entail sufficient risk to justify performance as the basis for compensation. Efforts to include reasonable performance risk in the contract can be nullified if the contractor is permitted to end-run the risks by recruiting and enrolling the most job-ready among the eligible population. Therefore, it is essential to include as part of the contract a profile of the kinds of individual educational, skill, and experience deficiencies that the grantor agency seeks to target and overcome in order to ensure delivery of real added value benefit. However, “[E]xcept where service to specific populations is authorized by Statute (such as WIA Section 166), it is unlawful under WIA Section 188(a)(2) and 29 CFR 37.6(b)(1-6) for One-Stop systems to use demographic characteristics to determine which individuals will receive services.” [WIA Final Rules, Preamble, published in the Federal Register, 65 Fed. Reg. 49294, 49344 (2000)] Example: An agency enters into a fixed-price contract to provide job readiness activities to welfare participants. As part of the contract, the agency specifies that participants must meet the eligibility requirements of 20 CFR 645.212. In this way, the agency has assured that the hard-to-employ participants will be receiving the specified services, rather than individuals who qualify under the other welfare eligibility requirements. Causation. PBCs can foster innovative delivery approaches and significant cost savings. However, care must be taken to ensure the likelihood that the activities being paid for are principally responsible for the delivery sought. Example: An agency contracted for weekly delivery of not fewer than five bona fide job vacancies suitable for participants completing the training program. After paying for delivery over several months, the grantor began to notice a coincidence between what it was buying and want ads in local Sunday newspapers. In fact, it was paying premium prices for information otherwise available in the public domain. The resources the grantor had thought would be necessary for this project were not, in fact, meaningfully involved in causing delivery under the PBC. Third-Tier Delivery. The core of work identified for delivery under performance contracts should be consistent with participant objectives intended to be achieved and compensated under the award. It is desirable that the core of the work be delivered directly by the awardee rather than permitting the awardee to broker the work through sub agreements with other agencies (brokering OJT with employers is an exception). Additionally, if multiple tiers are enlisted, and each sub-tier absorbs resources, fund availability may be so depleted at the level where the core activity is actually provided that only short-term training intervention would be possible. Example: An agency enters into an agreement to provide placement services to WIA Title I Adult participants. The sub-grantee then enters into a number of sub agreements for placements. The agreements are structured so that payments are made only for completion of the primary activity, i.e., placement in unsubsidized employment. Another way in which third-tier delivery may be faulty is if the sub-grantee claims compensation for performance-based on lower-tier agencies actually providing 47

uncompensated services that are readily available at no cost/lower cost to the sub-grantee within the community. Example: A PBC between an agency and an LWIB specifies delivery of vocational training to result in specific achievement rates, including completions and training-related placements at a designated median wage rate. Results are to be compensated on incremental performance basis, with full delivery valued at $1,200 per participant. Six months into the contract period, monitoring of the contract by the LWIB reveals that the agency has hired no one to teach the vocational classes from which it is claiming compensation for completions and placements. The monitoring further reveals that (1) the entity actually providing the training is the local community college; (2) tuition, fees, books, and supplies total less than $200 per student; (3) all participants have been referred to the college by the agency; (4) the majority of participants are eligible for and receiving Pell grant assistance (U.S. Department of Education funds); and (5) according to interviews with a sample of participants, they all indicate having found their placements without assistance from the agency. For-profit enterprises are entitled to retain earnings above costs attributable to their PBCs. Profits should be allocated among the cost categories in proportion to the allocation of costs among the cost categories. For governmental and nonprofit agencies under WIA Title I (except Job Corps), however, earnings above costs are regarded as program income subject to reprogramming or remittance as provided by 29 CFR 95.24 or 29 CFR 97.25. Consequently, a provision is often included in PBCs for governmental and nonprofit agencies limiting the recovery of costs to the lesser of actual costs incurred or the cumulative increments learned for less than full performance. Auditing of PBCs focuses on verification that the delivery for which costs were claimed and paid was sufficiently documented to justify its compensation, i.e., documentation of participant achievement is the primary object of verification. REQUIRED CONTRACT CLAUSES The type of agreement entered into by a grantee or sub-grantee may be fixed price or cost reimbursement depending on the method of procurement and goods or services being procured. Each agreement funded by the ETA grant programs must contain the specific clauses referred to in 29 CFR 97.36(i), or 29 CFR 95.48, and Part 95, as appropriate. They are listed below. For all contracts in excess of the small purchase threshold, administrative, contractual, or legal remedies where contractors violate or breach contract terms. The clause must also provide for sanctions or penalties, as appropriate. Termination for cause and for convenience by the awarding agency, including the process for exercising the clause and any basis for settlement (applies to contracts in excess of $10,000 (Part 97) or contracts in excess of $100,000 (Part 95) Access to records by the awarding agency, the grantee, the USDOL, or the Comptroller General of the United States for the purposes of audit, examination, excerpts, and transcriptions (for other than small purchase transactions) Notice of awarding agency requirements and regulations related to reporting Notice of awarding agency requirements and/or regulations related to patent rights, copyrights, and rights in data 48

Record retention requirements as specified in 29 CFR 97.42 or 29 CFR 95.53 Compliance with Equal Employment Opportunity provisions in Executive Order (E.O.) 11246, as amended by E.O. 11375 and supplemented by the requirements of 41 CFR Part 60. These are codified for USDOL programs at 29 CFR Parts 33 and 37. Compliance with Sections 102 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 328 and 333) (all contracts in excess of $2,500 that involve employment of mechanics or laborers and all construction contracts in excess of $2,000) Compliance with the applicable standards, orders, or requirements issued under Section 306 of the Clean Air Act, Section 508 of the Clean Water Act, E.O. 11738, and Environmental Protection Agency regulations (40 CFR Part 15) (applies to contracts, subcontracts, and sub grants in excess of $100,000) Mandatory standards and policies related to energy efficiency, which are contained in the State energy conservation plan issued in compliance with the Energy Policy Conservation Act (Public Law 94-163) A provision requiring compliance with the Byrd Anti-Lobbying Amendment (31 U.S.C. 1352). This requirement is also found in 29 CFR Part 93. A provision requiring compliance with the debarment and suspension requirements (E.O. 12549 and 12689). This requirement is also found in 29 CFR Part 98 Compliance with the provisions of the Davis-Bacon Act for construction contracts in excess of $2,000 A provision requiring compliance with the Copeland Anti-Kickback Act (construction and repair awards) A provision requiring compliance with the Walsh-Healy Act (41 U.S.C 35 et seq) A provision requiring compliance with the Service Contract Act of 1965 (41 U.S.C 351-58) Compliance with the provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA)(Public Law 104-191, August 21, 1996) A provision requiring compliance with the Fair Labor Standards Act of 1938 (29 CFR 510-794; 29 USC 201), which establishes standards for minimum wages, overtime pay, record-keeping, and child labor A provision requiring compliance with the Jobs for Veterans Act (TEGL #5-03 dated September 16, 2003), which provides specific guidance State and local workforce areas; private, national and/or pilot/demonstration operators of employment and training programs funded by the United States Department of Labor; and other grantees. Grantees and sub-grantees must also use the contract provisions to include other requirements of the WIA or other ETA grant program, as appropriate. These include provisions related to the following: Applicability of the appropriate ETA program and administrative regulations Audit requirements of 29 CFR Parts 96 and 99. PROCURING AN AUDIT Public entities should never select auditors without considering five basic elements of an effective audit procurement process: Planning – determining what needs to be done and when Fostering competition by soliciting proposals – writing a clear and direct solicitation document and disseminating it widely 49

Technically evaluating proposals and qualifications – authorizing a committee of knowledgeable persons to evaluate the ability of prospective auditors to effectively carry out the audit Preparing a written agreement – documenting the expectations of both the entity and the auditor Monitoring the auditor’s performance – periodically reviewing the progress of that performance. Full and open competition is basic to government procurement. Encouraging as many qualified audit firms as possible to submit their proposals for auditing your organization increases the likelihood that your will receive a quality audit at a fair price. The next step is to communicate your audit needs to potential bidders. This step is critical because bidders who do not clearly understand exactly what services you want might not respond. EQUIPMENT AND RELATED REQUIREMENTS Equipment is defined at both 29 CFR 97.3 and 95.2 as tangible, nonexpendable personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit, including all costs related to the property’s final intended use. GDOL defines equipment as tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $1,000 or more per unit. Local areas must inventory all equipment over $1,000. Per 20 CFR 667.200, an actual physical inventory must be conducted every two years. GDOL also requires all property over $1,000 bought with WIA funds to be tagged and identified. Local areas should have written procedures pertaining to equipment which contain requirements for conduct of physical inventory every two years, methods for sale or disposition of equipment, maintenance, and requirements to account for the status of property at the closeout. Equipment inventory records should contain at a minimum the following information (29 CFR 95.34): Description of equipment Location and use Serial number Purchase price and date Percentage of Federal participation in the purchase Title Acquisition date Condition Control system for loss, theft, or damage Disposal date and sales price, if appropriate

50

CHAPTER 8 : AUDITS AND AUDIT RESOLUTION

AUDIT REQUIREMENTS VENDOR OR SUBRECIPIENT RELATIONSHIP AUDITS AUDIT RESPONSIBILITIES (OMB A-133) FINANCIAL SETTELEMENT/FINAL DETERMINATION CLOSURE, SUSPENSION AND TERMINATION

51

AUDIT REQUIREMENTS 29 CFR 99.105 sets forth standards for obtaining consistency and uniformity among Federal Agencies for the audit of non-Federal entities expending Federal awards. OMB Circular A-110 Uniform Requirements for Grants to Universities, and Other Nonprofit Organizations sets forth the requirements for obtaining consistency among Federal agencies in the administration of grants and other agreements. The uniform requirements replace the varying and often conflicting requirements that have been imposed by Federal agencies as conditions of grants and agreements with recipients. OMB Circular A-133 Audits of States, Local Governments, and Non-Profit Organizations states that organizations receiving $300,000.00 or more ($500,000.00 for fiscal or calendar years ending after December 31, 2003) in a year in Federal awards shall have a single or program specific audit conducted for that year in accordance with OMB Circular A-133. O.C.G.A. 50-20-1 through 50-20-8 as amended, 1998 Legislative Session states that organizations expending $100,000.00 or more in State funds during their fiscal year must obtain an entity-wide audit of their financial records performed by an independent auditor. The audit is conducted in accordance with Generally Accepted Auditing Standards issued by the American Institute of Certified Public Accountants and the financial statements are prepared in accordance with general accepted accounting principles. Organizations expending at least $25,000.00 but less than $100,000.00 per year in State funds with contract provisions and GDOL policy must submit audited or un-audited financial statements. Organizations are also required to comply with the provisions of O.C.G.A. Section 50-20-1 through 50-20-8, as amended, 1998 Legislative Session. Audits or financial statements of non-profit organizations also include a “Schedule of State Awards Expended”. Organization receiving $25,000.00 in State funds are exempt from State audit requirements, but records have to be available for review by the appropriate officials of the Federal grantor agency or sub granting entity. The GDOL is responsible for the audit of commercial organizations (for-profit) that function as direct recipient of WIA grants and Rehabilitation Services contracts. OMB Circular A133, Section 210(e), states that, when a commercial organization is a sub-grantee of State, Local Government, or Non-Profit agency funded by Federal funds, then the audit responsibilities must be specified in the agreement and may include “post award audits.” STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS The State of Georgia Department of Audits and Accounts review the audit reports submitted by Government Agencies, Universities and Colleges, and Non-Profit Organizations. The office of Audits reviews the information and determines compliance with OCGA Section 5020-1 through 50-20-8 as amended, 1998 Legislative Section. The Office of Audits notifies the government agencies the results of their review. For instance of non-compliance with stated requirements, the non-compliant or omitted items are specified in the report. States, Local Governments, Universities and Colleges, and Non-Profit Organizations should submit one (1) copy of the required audit or financial statements within 180 days after the close of the organization’s fiscal or calendar year to: 52

Georgia Department of Audits and Accounts Professional Practice Division – Suite 214 254 Washington Street, S.W. Atlanta, Georgia 30334-8400 VENDOR OR SUB-RECIPIENT RELATIONSHIP OMB Circular A-133 Subpart B—Audits, Section 210, stated that an auditee might be a subrecipient and a vendor. A recipient or a sub-recipient would be subject to audit. Some characteristics indicative of a sub-recipient relationship are when the organization: 1. Determines who is eligible to receive what Federal financial assistance. 2. Has its performance measured against whether the objectives of the Federal program are met. 3. Has responsibility for programmatic decision-making. 4. Has responsibility for adherence to applicable program compliance requirements. 5. Uses the Federal funds to carry out a program of the organization as compared to providing goods or services for a program of the pass-through entity. OMB Circular A-133, Section 105 defines vendor as a “dealer, distributor, merchant, or other seller providing goods and services that are required for the conduct of a Federal program.” Some characteristics indicative of vendor relationship are when the organization: 1. 2. 3. 4. 5. Provides goods and services within normal business operations. Provides similar goods and services to many different purchasers. Operates in a competitive environment. Provides goods or services that are ancillary to the operation of the Federal program. Is not subject to compliance requirements of the Federal program.

Furthermore, in most cases the auditee’s compliance responsibility for vendors is only to ensure that the procurement, receipt and payment for goods and services comply with laws, regulations, and the provisions of the contracts and grants agreements. However, if the vendor’s activities or services affect the pass-through entity’s ability to comply with program requirements, the pass-through entity must monitor that aspect of the vendor performance. AUDITS FREQUENCY OF THE AUDIT Federal Agencies, as well as State agencies, will rely on financial audits of Non-Profit organizations provided such audits meet the requirements of OMB Circular A-133, Government Audit Standards (GAS), and Generally Accepted Auditing Standards (GAAS) or Yellow Book. Financial statement audits determine (1) whether the financial statements of an audited entity present fairly the financial position, results of operations, and cash flows or changes in the financial position in accordance with generally accepted accounting principles, and (2) 53

whether the entity has complied with laws and regulations for those transactions and events that may have material effect on the financial statements. Financial related audits determine (1) whether the financial reports and related items as accounts or funds are fairly presented, (2) whether financial information is presented in accordance with established or stated criteria, and (3) whether the entity has adhered to specific financial compliance requirements. OMB Circular A-133 requires that audits be conducted with reasonable frequency, on a continuing basis, usually annually but not less frequently than every two years. Organizations that have Federal agreements or statutory provisions that require annual audits should ensure their audits are performed annually. SCOPE OF AUDIT COVERAGE In performing their work, the auditor has neither direct authority over, nor responsibility for, any of the activities reviewed. Therefore, the auditor does not develop and install procedures, prepare records, make management decisions, or engage in any other activities that could be reasonably construed to compromise his/her independence. Furthermore, auditors are prohibited from engaging in function as a consultant while offering auditing services. Thus, internal auditor reviews and appraisals do not, in any way, substitute for or relieve other department personnel from their assigned responsibilities. INTERNAL CONTROL Internal control procedures are to be an integral part of the financial and business processes and are not a superimposed set of requirements. Internal controls procedures operate under a system that: Safeguards agency assets Checks the accuracy and reliability of accounting data Promotes operational efficiency and effectiveness Protects personnel Ensures adherence to prescribed managerial policies Ensures compliance with applicable policies and regulations Complies with State and Federal laws and regulations Administrators, who have the responsibility for developing, operating, and supervising financial systems, also have responsibility for developing and implementing adequate internal control systems. Internal control systems are to conform to generally accepted characteristics such as the following: Organizational plans that provide appropriate segregation of functional responsibility. Authorization and record keeping procedures that give reasonable accounting control over assets, liabilities, revenues, expenses, and other changes in the balance of funds. Sound practices that insure a high degree of compliance with approved authorization and record keeping procedures. Employees with capabilities sufficient to execute the prescribed responsibilities. 54

Appropriate records, forms, and reports are to be maintained, as well as logical flow of record keeping and approval procedures. Policies and instructions regarding these operations are to be documented in procedural write-up manuals. Appropriate records include: Control accounts and subsidiary ledgers Meaningful classification of transactions Documented accountability where it serves a useful purpose The adopted practice should enhance the integrity of authorizations, recording, and custodial responsibilities. Sound practices include a continuous review of routine transactions, whereby the work of one person is approved independent of or complementary to the work of another. There should be a division of duties and responsibilities so no person has complete control over all aspects of a financial transaction. All internal controls are to be considered in the light of their economic utility, practicability, and protection of personnel. In instances where the cost of protection would far out weigh possible losses, or proposed controls would cause gross inefficiencies, it may be decided that certain controls are not feasible and other alternatives may be more advisable. Responsibility does not end with the implementation of control procedures initially considered necessary. The system of internal control must be under constant review by administrators and supervisors at all levels to determine that: Prescribed policies are being interpreted properly and are being carried out Changes in operating conditions have not made the procedures cumbersome, obsolete, or inadequate. Corrective measurements are taken promptly when system breakdowns appear. It should be noted that management makes assertions related to financial compliance matters, which are similar to assertions related to financial statements. Testing the assertions of management tests the reliability of management. If management asserts the allowability of costs claimed, management also asserts that a system is in place to assure the allowability of costs claimed. When the auditor determines that such a system does not exist or is not effective, then the reliability of management is brought into question and audit risk is dramatically increased. Generally, the auditor should evaluate the policies and procedures related to the control systems. COMPLIANCE REQUIREMENTS The OMB Compliance Supplement for Single Audit of State and Local Government was designed for audits of State and Local Government, its use are applicable to the program awarded to non-profit organizations. The Compliance Supplement includes general and specific compliance requirements. The general compliance requirements deal with the following matters: 1. 2. 3. 4. Political Activity Davis-Bacon Act Civil Rights Cash Management 55

5. Federal financial reporting The specific requirements generally pertain to the following topics: 1. Types or services allowed or not allowed 2. Allowable cost/cost principles 3. Equipment and real property management 4. Period of availability of funds 5. Procurement and suspension and debarment 6. Program Income 7. Real property acquisition and relocation assistance 8. Sub-recipient monitoring 9. Special tests and provisions 10. Eligibility 11. Matching 12. Level of effort 13. Reporting The objective of tests of compliance with laws and regulations is to determine whether there were instances of non-compliance that may have a material effect on the amount claimed for reimbursement. AUDIT RESPONSIBLITIES (OMB A-133) GDOL GENERAL RESPONSIBILITIES AS THE PASS-THROUGH ENTITY 400(d) Inform sub-recipients of CFDA title and number, award name and number, and award year. 400(d)(3) Advise sub-recipients of all Federal laws, regulations, and grant and contract requirements. 400(d)(4) Ensure that sub-recipients expending over $500,000.00 (after December 31, 2003) in Federal awards meet the audit requirements of OMB Circular A-133. 400(d)(5) Issue a management Decision Letter within six months after receipt of the audit report, and ensure that appropriate and timely corrective actions are taken. 400(d)(6) Consider whether audit adjustments necessitate adjustment of records. 400(d)(7) Require each sub-recipient to permit appropriate access to records and financial statements. 405(c) Make management decisions for all audit findings related to Federal awards made. 405(d) Issue Management Decision Letter within six months of receipt of audit report. Corrective actions should be initiated within ix months after receipt of audit report. 405(e) Include reference numbers assigned by the auditor to each audit finding. 405(a) Clearly state whether or not the audit finding is sustained, the reason for the decision, expected auditee action to repay disallowed costs, make financial adjustments or take other actions. Give timetable for follow-up. Describe any appeal process.

56

The Grant Officer for direct WIA-funded recipients should follow the resolution process, which is comparable to the resolution process followed by the Federal level. A schematic depicting the flow of GDOL audit resolution is provided below. GDOL AUDIT RESOLUTION PROCESS FLOW CHART

A-133 Audit Completed plus Corrective Actions Plan

GDOL 180 Days for Resolution

Initial Determination

All Findings Resolved Final F&D May Be Issued

Informal Resolution Period

Issuance of Final Determination

Appeal to GDOL Workforce Development Office (21 Days)

57

A-133 COMPLETED 1. Audited financial statements and independent Auditors report. 2. Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. REPORTING PACKAGE SUBMITTED TO GDOL 1. Schedule of Expenditures of Federal Awards and Notes. 2. Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance. 3. Schedule of Findings and Questioned Costs. 4. Summary Schedule of Prior Audits Findings. 5. Auditee Responses/Corrective Action Plans. GDOL 180 DAYS OF RESOLUTION As a part of its audit follow-up responsibilities under Circular A-133, GDOL must issue a management decision on the audit findings within six months after receipt of the audit report. INITIAL DETERMINATION Initial Determination provides for an informal resolution period of at least 60 days and, if the audit is resolve informally, the Grant Officer must issue a Final Determination that notifies the parties of the resolution. INFORMAL RESOLUTION PERIOD During this period, the auditee/sub-recipient has the opportunity to present new evidence, documentation, and an explanation to modify the decision by the awarding agency. The auditee/sub-recipient has an opportunity to agree to corrective actions before awarding agency initiates sanctions or remedial actions. ALL FINDINGS RESOLVED – FINAL F&D MAY BE ISSUED The awarding agency must identify an appropriate course of action to remedy the deficiency or variance (audit findings). The remedy it selects to include in the Finding and Determinations (FD) may be thought of as a sanction. ISSUANCE OF FINAL DETERMINATION The Final Determination should be sent to the auditee/sub-recipient within reasonable time (not more than six months) after awarding agency receives the final audit report. APPEAL TO GDOL (21 DAYS) The provision of this option indicates that affected parties may appeal the decision and the sanctions imposed within 21 days of receipt of the Grant Officer’s Final Determination by requesting a hearing before GDOL Workforce Development Office. The request for appeal must include a statement of issues that identifies the specific portion of the Final Determination and a copy of the Final Determination. WDO must issue a written decision no later than 90 days after the closing of records.

58

LWIA RESPONSIBLITIES AS THE AUDITEE GENERAL 300(a) Identify in its accounts, all Federal awards received and expended and the Federal program under which they were received. 300(b) Maintain internal control over Federal programs. 300(c) Comply with laws, regulations, and the provisions of contracts or grants agreements related to its Federal programs. 300(d) prepare appropriate financial statements, including the schedule of expenditures of Federal awards. 300(e) Ensure that the required audit is properly performed and submitted when due. Only the cognizant or oversight agency for audit can grant extension to the due date. 300(f) Follow-up and take corrective action on audit findings, including preparation of summary schedule of prior audit findings and corrective action plan. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 310(b) the auditee shall prepare a schedule of expenditures of Federal Awards for the period covered by the auditee financial statements that list the individual Federal programs by Federal agency. 310(b)(2) Sub-recipients shall include the name of the pass-through entity and identifying numbers assigned by the pass-through entity, i.e., expenditures of funds received directly from WIA local areas shall be listed by grant number. 310(b)(3) The schedule shall show the total Federal awards expended for each Federal program and the “Catalog of Domestic Federal Assistance” (CFDA) number or other identifying number when the CFDA number is not available. For a list of USDOL Program Title and CFDA number go to www.cfda.gov 310(b)(4) 310(b)(6) The schedule should include notes that describe the significant accounting policies used in preparing the schedule and the value of any Federal awards expended in the form of non-cash assistance. AUDIT REPORT DUE DATE 320(a) The audit shall be completed and the data collection form and reporting package shall be submitted within the earlier of 30 days after receipt of the auditor’s report, or nine months after the end of the audit period. 300(e) Only the cognizant or oversight agency for audit can grant extension to the due date. REPORT SUBMISSION 320(d) One (1) copy of each of the following as an archival copy and one (1) copy for each Federal awarding agency that provided funds directly, when there were related funding for the current or prior year: 320(c) Reporting Package 320(b) Data Collection Form

59

Submit to: Federal Audit Clearing House Bureau of the Census Post Office Box 5000 Jeffersonville, IN 47199-5000 Additional LWIA should submit to the GDOL two (2) copies of the reporting package within 180 days after the close of the organization’s fiscal or calendar year to: . Georgia Department of Labor 148 Andrew Young International Boulevard, NE Suite 302 Atlanta, Georgia 30303-1751 CORRECTIVE ACTION PLAN 315(c) Address each finding included in the current year’s report. Provide the name of the contact person responsible for the corrective action. Describe the corrective action planned. Give the anticipated completion date. If audit does not agree with the finding, provide specific reasons. SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS 315(b) Report status of all findings included on prior year’s Schedule of Findings and Questioned Costs and Summary Schedule of Prior Year Audit Findings. 315(b)(1) When audit findings are fully corrected, the summary schedule need only list the audit findings and state that corrective action was taken. 315(b)(2) When audit findings are not corrected or are partially corrected, the summary schedule shall describe the planned corrective action as well as any partial corrective action taken. 315(b)(3) When corrective actions taken are significantly different from corrective action previously reported in the corrective action plan or in the Federal agencies or pass-through entity’s management decision, the summary schedule shall provide an explanation. 315(b)(4) When the auditee believes that the audit findings are no longer valid or do not warrant further action, the reasons for this position shall be describe in the summary schedule. LWIA RESPONSIBILITIES FOR LOWER TIER SUB-RECIPIENTS Each Fiscal Agent is required to coordinate the auditing of WIA funds contracted to subrecipients during each fiscal year or calendar year in accordance with OMB Circular A-133 and the O.C.G.A. 50-20-1 through 50-20-8 as amended, 1998. Additionally, LWIAs are responsible for determining the adequacy of the sub-recipient’s audit report prepared by independent audit firm who have been engaged to performed audits of Federal programs as well as State programs. As the Fiscal Agent, the LWIA has the following responsibilities: 60

400(d) Inform sub-recipients of CFDA title and number, award name and number, ands award year. 400(d)(3) Advise sub-recipients of all Federal laws, regulations, and grant and contract requirements. 400(d)(4) Ensure that sub-recipients expending over $500,000.00 (after December 31, 2003) in Federal awards meet the audit requirements of OMB Circular A-133. 400(d)(5) Issue a management Decision Letter within six months after receipt of the audit report, and ensure that appropriate and timely corrective actions are taken. 400(d)(6) Consider whether audit adjustments necessitate adjustment of records. 400(d)(7) Require each sub-recipient to permit appropriate access to records and financial statements. 405(c) Make management decision’s for all audit findings related to Federal awards made. 405(d) Issue Management Decision Letter within six months of receipt of audit report. Corrective actions should be initiated within ix months after receipt of audit report. 405(e) Include reference numbers assigned by the auditor to each audit finding. 405(a) Clearly state whether or not the audit finding is sustained, the reason for the decision, expected auditee action to repay disallowed costs, make financial adjustments or take other actions. Give timetable for follow-up. Describe any appeal process. Fiscal Agent for direct WIA-funded recipients should follow the resolution process, which is comparable to the resolution process followed by the Federal level. The exception here is that there is no appeal process to the USDOL. Please refer to page 57 to reference the schematic depicting the flow of Federal level audit resolution is provided below.

61

LWIA AUDIT RESOLUTION PROCESS FLOW CHART

A-133 Audit Completed plus Corrective Actions Plan

LWIA 180 Days for Resolution

Initial Determination

All Findings Resolved Final F&D May Be Issued

Informal Resolution Period

Issuance of Final Determination

Appeal to GDOL Workforce Development Office (21 Days)

62

LOWER TIER SUB-RECIPIENT RESPONSIBILITIES GENERAL 300(a) Identify in its accounts, all federal awards received and expended and the Federal program under which they were received. 300(b) Maintain internal control over Federal programs. 300(c) Comply with laws, regulations, and the provisions of contracts or grants agreements related to its Federal programs. 300(d) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards. 300(e) Ensure that the required audit is properly performed and submitted when due. Only the cognizant or oversight agency for audit can grant extension to the due date. 300(f) Follow-up and take corrective action on audit findings, including preparation of summary schedule of prior audit findings and corrective action plan. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 310(b) The auditee shall prepared a schedule of expenditures of Federal Awards for the period covered by the auditee financial statements that list the individual Federal programs by Federal agency. 310(b)(2) Sub-recipients shall include the name of the pass-through entity and identifying numbers assigned by the pass-through entity, i.e., expenditures of funds received directly from WIA local areas shall be listed by grant number. 310(b)(3) The schedule shall show the total Federal awards expended for each Federal program and the “Catalog of Domestic Federal Assistance” (CFDA) number or other identifying number when the CFDA number is not available. For a list of USDOL Program Title and CFDA number go to www.cfda.gov 310(b)(4) 310(b)(6) The schedule should include notes that describe the significant accounting policies used in preparing the schedule and the value of any Federal awards expended in the form of non-cash assistance. AUDIT DUE DATE 320(a) The audit shall be completed and the data collection form and reporting package shall be submitted within the earlier of 30 days after receipt of the auditor’s report, or nine months after the end of the audit period. 300(e) Only the cognizant or oversight agency for audit can grant extension to the due date. REPORT SUBMISSION Submit to: Federal Audit Clearing House Bureau of the Census Post Office Box 5000 Jeffersonville, IN 47199-5000

63

320(d) One (1) copy of each of the following as an archival copy and one (1) copy for each Federal awarding agency that provided funds directly, when there were related funding for the current or prior year: 320(c) Reporting Package 320(b) Data Collection Form Additional Lower Tier Sub-recipients should submit to the each LWIA one (1) copy of the reporting package within 180 days after the close of the organization’s fiscal or calendar year to: Insert LWIA Address

CORRECTIVE ACTION PLAN 315(c) Address each finding included in the current year’s report. Provide the name of the contact person responsible for the corrective action. Describe the corrective action planned. Give the anticipated completion date. If audit does not agree with the finding, provide specific reasons. SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS 315(b) Report status of all findings included on prior year’s Schedule of Findings and Questioned Costs and Summary Schedule of Prior Year Audit Findings. 315(b)(1) When audit findings are fully corrected, the summary schedule need only list the audit findings and state that corrective action was taken. 315(b)(2) When audit findings are not corrected or are partially corrected, the summary schedule shall describe the planned corrective action as well as any partial corrective action taken. 315(b)(3) When corrective actions taken are significantly different from corrective action previously reported in the corrective action plan or in the Federal agencies or pass-through entity’s management decision, the summary schedule shall provide an explanation. 315(b)(4) When the auditee believes that the audit findings are no longer valid or do not warrant further action, the reasons for this position shall be describe in the summary schedule. FINANCIAL SETTLEMENT/FINAL DETERMINATION If it is established in the management decision letter that questioned costs are disallowed, then the disallowed amount will be considered debt. The final determination should be sent to the auditee no more than six months after the awarding agency receives the final audit report. The Final Determination should be sent by U.S. Certified Mail, return receipt requested. The final determination letter should: 1. Reference the initial determination 2. State the awarding agency’s final decision to disallow costs, listing each disallowed cost specifically and noting the reasons for each disallowance. 64

3. Identify the questioned costs in the audit report that have been allowed by the awarding agency and the basis for allowance of costs. 4. Demand repayment of disallowed costs. 5. Describe debt collection actions and other sanctions that the awarding agency may impose if repayment is not made. 6. Inform the auditee of its rights to appeal 7. Restate the status of each administrative finding. 8. Identify areas of disagreement between the parties. 9. If the auditee appeals, no further collection action can be taken, pending the outcome of the appeal. 10. The final determination letter should advice the auditee that the determination is based on information that was currently available. If new information becomes available, the final determination may be reopened at the awarding agency’s options. STAND-IN COSTS AND AUDIT RESOLUTION ETA considers the application of stand-in costs during the audit resolution process. The auditee may propose the use of stand-in costs to substitute for the disallowed costs. Stand-in costs must meet the following criteria: 1. To be considered the stand-in costs must be incurred for allowable WIA costs that were reported as uncharged WIA program costs, included within the scope of the audit and accounted for in the auditee’s financial system. 2. The stand-in costs must have been expended in support of the title and program year as the cost they proposed to replace. The cost shall not result in a violation of the applicable cost limitations. Certain costs, including in-kind contributions, are not considered unpaid ETA program liabilities, but rather as an in-kind match; therefore they cannot be used as stand-in costs because they cannot be charged to Federal grants. Some examples are as follows: Uncompensated overtime Unbilled premises costs associated with fully depreciated publicly owed buildings Allocated costs derived from improper allocation methodology Discounts, refunds, and rebates A State share of the cost of State or Community College tuition CLOSEOUT, SUSPENSION AND TERMINATION Each grant shall be closed out as promptly as is feasible after expiration or termination. The granting agency shall make a settlement for any upward or downward adjustment. The close out of a grant does not affect the retention period for, or Federal rights of access to, grant records. Closeout is a normal procedure under grants, and it should not be confused with suspension or termination. There are three key features of closeout including: Submitting all final performance, financial and other required reports; Adjusting the Federal share of costs, upward or downward, if necessary; and Settling any cash balances. 65

An unencumbered balance of cash advanced, program income, and refunds to a grantee must be refunded to the Federal agency or be reflective by an appropriate accounting adjustment according to the agency’s instructions. Likewise, any cash owed to the grantee, the Federal agency should make prompt payments for any reimbursable costs. Program income earned during the grant should have been earned and spent in accordance with the payment sections of the Office of Management and Budget Circular A-102 and A-110. If a grant is closed out without an audit, the granting agency retains the right to disallow and recover an appropriate amount after fully considering any recommended disallowances resulting from an audit which may be conducted later. For each grant, the following sums shall constitute a debt or debts owed by the grantee to the Federal Government, and shall if not paid upon demand, be recovered from the grantee or its successor or assignees by set-off or other action as provided by law: Any grant funds paid to the grantee by the Federal Government in excess of the amount to which the grantee is finally determined to be entitled under the terms of the grants. Any interest or other investment income earned on advances of grant funds which is due to the Federal Government. Any royalties or other special classes of program income, which, under the term of the grant, are required to be remitted to the Federal Government. Any other amount finally determined to be due to Federal Government under the terms of the grant. In closeout, care must be taken in interpretation of applicable statutes and regulation to ensure that requirements of recipients are not indiscriminately applied to sub-recipients. Grantee must develop timetables and procedures that produce effective closeouts and meet the Federal expenditures report submittal requirements of 90 days after the end of the three years funding period. In addition to normal closeout, there are two other procedures that Federal agencies may elect to cease grant support: Suspension and Termination. When a grantee has materially failed to comply with the terms of a grant, the granting agency may suspend, and/or terminate the grant for cause, or take such other remedies as may be legally available and appropriated in the circumstances. When a grantee has materially failed to comply with the terms of a grant, the granting agency may, upon reasonable notice to the grantee, suspend the grant in whole or in part. The Notice of suspension will state the reason(s) for suspensions, any corrective action required of the grantee, and the effective date. Suspension shall remain in effect until the grantee has taken corrective action satisfactory to the granting agency, or given evidence satisfactory to the granting agency that such corrective actions will be taken. New obligation incurred by the grantee during suspension period will not be allowed unless the granting agency expressly authorizes them in the notice of suspension or an amendment to it. The granting agency may terminate any grant in whole, or in part, at any time before the date of expiration, whenever it determines that the grantee has materially failed to comply with the terms of the grant. The granting agency shall promptly notify the grantee in writing of the 66

determination and the reasons for the termination, together with the effective date, and in the case of partial termination, the portion to be terminated. When a grant is terminated, the grantee shall not incur new obligations for the terminated portion after the effective date and shall cancel, as may outstanding obligations as possible. The granting agency shall allow full credit to the grantee for the Federal share of the noncancelable obligations properly incurred by the grantee prior to termination. Furthermore, a grant can be terminated when both parties agree to the termination for convenience. A grantee can decide and generally is free to walk away from any grants as long as it incurs no additional obligations for Federal funds.

67

CHAPTER 9 : APPENDICES
APPENDIX A: WIA LOCAL AREA REQUIREMENTS

APPENDIX B: INSTRUCTIONS FOR FINANCIAL STATUS REPORTING SYSTEM APPENDIX C: WIA GRANT FUNDING PERIODS APPENDIX D: EXAMPLES OF FARS REPORTS (FOR GDOL-MANAGED AREAS ONLY) APPENDIX E: SAMPLE ADJUSTMENT AND FIFO WORKSHEETS (FOR GDOL-MANAGED AREAS ONLY) APPENDIX F: FINANCIAL REPORTING SYSTEMS FORMS APPENDIX G: ACRONYMNS APPENDIX H: GLOSSARY

68

APPENDIX A: REQUIREMENTS

WIA

LOCAL

AREA

69

WIA LABOR LOCAL AREA REQUIREMENTS Local workforce areas have the responsibility to know Federal requirements and to establish all policies required by the Act and regulations, many of which must be published in area’s WIA plan. Local areas should develop additional policies as appropriate to guide local operations to ensure quality services for customers where gaps are identified or where specificity is needed. Local policies may be more stringent than Federal or State policies, as long as they are consistent with the intent of the Act. The Georgia Department of Labor requires all local areas to have written policies and procedures on site, at a minimum, addressing the following: Budgeting System (29 CFR 97.20, 97.22, and 97.30) • Local area should have a budget for use of funds by month/quarter, and by function, throughout the term of the grant. • The budget should identify costs for comprehensive One-Stop operations. • Local area should have written policies for determining which method (such as interim financial reporting) is used to determine planned versus actual costs. • Local area should have an obligational control register to track planned and actual receipt of award funds from the granting agency and commitments made against such funds, and the remaining unliquidated balances. Memorandum of Understanding (20 CFR 662.300b) • The WIA regulations require the partners in a One-Stop system to maintain a written agreement (MOU), which includes a description of the shared costs of the One-Stop center. • Local areas should ensure that all partners are bearing their fair share and have a written agreement signed by the partners as to how common costs will be shared in the operation of the One-Stop (i.e. space, administrative staff, utilities, office equipment, postage, etc). • Local area should ensure the method used to determine that each partner’s fair share contribution is equitable. • Local area should ensure that the bases used for allocating different types of cost are reasonable and the funding sources (bases) are reviewed periodically. Allowable Cost Policy (20 CFR 667.220) • Local areas must have an allowable cost policy that prohibits the following: Public service employment, except to provide disaster relief employment (20 CFR 667.264) Relocation of a business or part of a business that results in the loss of employment at the original location (20 CFR 667.264) Employment generating and similar activities if not related to training for eligible individuals (20 CFR 667.262) Sectarian activities (20 CFR 667.266b2) Foreign Travel (20 CFR 667.264) Political activities (WIA Section 195(6)) Duplication of facilities/services available in the area (20 CFR 663.320) Employment or training of participants in sectarian activities (20 CFR 667.266) 70

Charging participants a fee for program for placement or referral into a training or other WIA-funded program (WIA Section 195(5) Displacement of employees by any WIA participant (20 CFR 667.264) and (20 CFR 645.265) The promotion or deterrence of union organizing (WIA Section 181(b)(7)) • No purchase of building/capital improvements were made except: To meet obligations for access and accommodation under Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990 or repairs, renovations and capital improvements of real property, including State Employment Service Agency real property (20 CFR 667.260) Job Training Partnership Act (JTPA) owned property transferred to WIA Title I programs Job Corps Facilities To fund construction-related disaster relief projects All those unallowable activities in the applicable OMB circular on cost principles A-87, A-122, including all prior approval requirements Financial Management System • Local areas are required to have written fiscal procedures including the following: Information regarding how the chart of accounts is organized Instruction to staff on recording transactions A process for handling staff payroll – how reported time vs. actual time is verified and timecard signature requirements Participant timecards, if appropriate How payroll taxes and other deductions are treated Travel rules for the organization and how travel advances are treated How subsidiary records and official records are reconciled and who is authorized to perform the activity Instructions on the separation of duties for recording and approving transactions How actual expenditures including all cash outlays (including tuition payments) plus all accruals for goods and services received but not yet paid for are converted to accrual or modified accrual expenditures for reporting purposes A system of internal controls Documentation of receipts and disbursements Cash Management • Local areas should have written procedures addressing cash advances, bank accounts for WIA, cash requests, authorized persons for cash requests, advances to subcontractors, requests for reimbursements, cash control ledgers, etc • Local areas should have procedures for (a) obtaining timely payment of amounts, (b) ensuring receipt of available purchase discounts, (c) avoiding late payment penalties, and (d) making timely but not premature payment of amounts it owes. Program Income 71

Program Income may be added to funds already obligated under these grants after the cost of generating the income is deducted, provided this cost is not charged to the WIA program. [Reference (29 CFR 95.24, 29 CFR 97.25) and (20 CFR 667.200(a)(5)(6)(7))] Program income should be reported in the entity’s books of accounts and on reports to its awarding agency. Program income expended for allowable purposes should be reported under the grant in which it is earned. All income generated under fee-for-service activity should be reported as program income. All interest earned on WIA deposits should be recorded as interest income. Program income should be identified and accounted for in program activities that generate income. Revenue in excess of costs in contracts with nonprofit or governmental entities should be recorded as program income. Program income funds should be liquidated before additional funds are requested for operation of the program. Procurement/Contract Management (Reference 29 CFR 95 or 29 CFR 97) • Local area should have written code of conduct governing performance of employees involved in the procurement process. • Local area should have sufficient documentation that demonstrates the procurements were made on a competitive basis. • Purchases should be divided so that amounts are within the small purchase limitation ($100,000 or lower threshold applicable to the area). • Local area should have documentation that a cost or price analysis was performed on each of the awards. • Procurements should be sufficiently advertised. • Local area should determine that all awardees were responsive and responsible. • Local area should have evidence that demonstrated performance was considered in the making of awards. • Awards/contracts should contain a clear statement of work. • Local areas should sufficiently ensure that contract costs are allowable. • Contract provisions found 29 CFR 95 and 29 CFR 97.36 should be included in the awards including but not limited to: remedies for contracts in excess of small purchase threshold, termination of convenience of default for contracts in excess of small purchase threshold, access to records for contracts in excess of small purchase threshold, Clean Air Act/Federal Water Pollution Control Act for contracts exceeding $100,000, debarment certification for contracts exceeding $25,000, lobbying certification for contracts exceeding $100,000, and Equal Employment Opportunity (EEO). • Records should be adequately maintained to document the significant history of each procurement action, including the basis for contractor selection or rejection, the rational for the contracting method and the contract type, justification for lack of competition, and the basis for a fair price in accordance with the administrative requirement of 29 CFR 95.46 and 29 CFR 97.36 (b)(9). Equipment Management 72

The requirements for use, management, and disposal of grant-purchased equipment for nonprofit and commercial organizations are found at 29 CFR 95.34 and for local government agencies at 29 CFR 97.32. Equipment as defined by USDOL is tangible, nonexpendable, personal property having a useful life of more that one year and an acquisition cost of $1,000 or more per unit or any more restrictive definition imposed by the awarding agency. • Equipment should be clearly marked and inventoried by funding source. • Written procedures should contain requirements for the conduct of physical inventory every two years, methods for sale or disposition of equipment, maintenance, and requirements to account for the status of property at closeout. • Equipment inventory should contain at a minimum the following information: description of equipment, location and use, serial number, purchase price and date, percentage of Federal participation in the purchase, title, acquisition date, condition, control system for loss/theft/damage, and disposal date and sale price if appropriate. Sub-grantee/Vendor Fiscal Oversight (20 CFR 661.305) • Local area should have a written process for consistent review of subcontractor and/or sub-recipient operations including One-Stop management and youth activities. • Local area should have a formal schedule for the conduct of reviews to ensure that oversight is conducted on an annual basis. • Local area should comply with any additional requirements set forth by its awarding agency regarding the conduct of the reviews. • The review process should cover all fiscal and administrative compliance requirements. • There should be a timely process for notifying the subcontract and/or subrecipient of any findings resulting from the review. • There should be a written administrative process for the resolution of findings resulting from the review. Audits (Reference OMB Circular A-133 and 20 CFR 667.200) • Local area should have a system for identifying all sub-recipients and subcontractors subject to audit requirements. • The system should keep track of when audits are to be conducted and issued. • The local area should have an oversight process, which ensures that its subrecipients and subcontractors procure audits on a timely basis and in accordance with the requirements of OMB Circular A-133 regarding the selection and independence of the auditor. Audit Resolution – OMB Circular A-133 requires the auditee to resolve audit findings within six months from the receipt of the audit report. • Local area should have a process for follow-up on administrative findings to ensure corrective actions have been taken. • Timely written notice to the auditee should include identification of findings, determination as to their allowance and disallowance, and a basis for each decision. • Local area should have a process for informally resolving issues. • Local area should have a timely appeals process. • Local area should have an impartial hearing process. 73

Debt Collection (20 CFR 667.720) • Local area should have a process for identifying and tracking outstanding debts. • Local area should have a process for debt collection that includes formal notification, timeframes, and charging of interest when appropriate. • While there are no specific requirements for the collection of debts, documented evidence that aggressive debt collection was undertaken is required before the USDOL Grant Officer can consider a request for waiver of liability. Local area should have criterion for requesting a waiver of liability from the USDOL Grant Officer. Closeout System • In order for a local area to comply with the awarding agency’s Federally mandated closeout requirements and timeframes, a process must be established for the timely submission of final expenditure reports. • Local area should have written procedures and policies that include postcloseout requirements for record retention and audit. Local areas should have written sanctions for entities that do not comply with the closeout requirements.

74

APPENDIX B: INSTRUCTIONS FOR FINANCIAL STATUS REPORTING SYSTEM

75

INSTRUCTIONS FOR FINANCIAL STATUS REPORTING SYSTEM SCREENS USED FOR ONLINE SYSTEM FS11 – User Sign On FS13 – Account Period Selection FS14 – Grant Selection FS15 – Main Entry FS16 – Youth Entry FS17 – Workforce Grants Print FS18 – National Emergency Grants Print ENTERING FINANCIAL INFORMATION FS11 – User Sign On 1) Enter User ID assigned 2) If this is the first time you have signed on, enter FSR12345 as your password. 3) Drop down to the New Password box and enter your new password. 4) Re-enter the new password in the Verify New Password box. 5) Click on submit (Passwords: Passwords must be at least 6 characters, but no more than 8. Alpha and numeric letters are acceptable. The system will recognize upper and lower case. The standard is lower case.) FS13 – Accounting Period Selection 1) After clicking on the submit button on the FS11, you will be taken to the FS13 where you will select the accounting month and year on which you will be reporting. The first accounting month to be entered online is January 2004. 2) The FS13 identifies the open accounting periods on which you can enter your WIA financial data. You can only enter data for an open or reopened accounting period. You can view past FSR information for accounting periods that have been closed. 3) Select the accounting month and year on which you want to report from the dropdown menus and click on the select button. 4) Generally we will open the accounting period for reporting purposes 15 days after the end of the reporting month, e.g. the January 2004 accounting period will be open February 15th. 5) We will generally close the accounting period for reporting purposes by the 1st of the second month after the reporting month, e.g. the January 2004 accounting period will be closed for reporting purposes by the end of the business day on March 1st. 6) For the June accounting period, we will close reporting by August 5th. This will be the financial data that is reported to USDOL and the data that USDOL will use to determine if expenditure and obligation requirements have been met. 7) The June accounting period will be reopened for entry of closeout information on August 15th. FS14 – Grant Selection 1) After clicking on the select button on the FS13, you will be taken to the FS14 where there will be a list of your open grants for each grant year by funding stream (Grant Title column). As is reflected on your current Excel and/or Lotus. FSR form, for each grant year, the administrative funds available have been pooled into one funding stream 76

2) The Status column will indicate where you are in the reporting process for each funding stream for each grant year. The following is an explanation of the grant status codes: o Initial – this is the status after grant availability has been loaded from the DOL Grants Management System. It includes any adjustments made during the accounting period to each funding stream for each grant year. It also includes any new grants issued to the local area during the accounting period, even if the local area has not returned the signed grant documents. Remember grant funds are not available to be drawn down until the grant documents are signed and returned. o Updated – this is the status after expenditure and obligation data has been entered and saved. Since the report has not been approved and submitted to the State, local area financial staff can change this data. o Submitted – the status after approval by authorized LWIA management. This data cannot be changed for this reporting period unless State staff puts the grant funding stream into “Amend” status. o Amend – State staff has reviewed the submitted financial information and changes/adjustments need to be made. The local area may also request the grant be put in amend status if there is an error that must be corrected in this accounting period. You will receive an email from Grants and Contracts division at the Central Office advising you which part of your report has been put in the amend status and needs to be adjusted and resubmitted. o Reupdated – this is the status after expenditure and/or obligation data has been adjusted and saved. Since the report has not been approved and resubmitted to the State, local area financial staff can change this data. o Resubmitted – the status after approval of the adjustments by authorized LWIA management. NOTE: If a grant/funding stream is in Submitted or Resubmitted status, LWIAs cannot make changes to information already submitted. If an LWIA needs to update and/or correct the report before the accounting report is closed, they should request that Grants and Contracts put the particular grant/funding stream in an Amend status. 3) Select a grant/funding stream to view data already entered or on which to begin reporting. Which grant funding stream or grant year on which you start your reporting is your choice. There is no particular funding stream/grant order in which to report WIA financial data. 4) All grants/funding streams listed on the FS14 should have cumulative expenditure and obligation data reported monthly. Draws will be held if expenditure and obligation data has not been submitted on all open grants by the closing date. FS15 – Grants Expenditure 1) After you select a grant/funding stream on the FS14, you will be taken to the FS15 or FS16. 2) The FS15 is the main entry screen. Except for changing the funding stream title and/or grant number, the screen is essentially the same for reporting administrative, adult and dislocated worker formula expenditures/obligations, statewide activities, rapid response, and National Emergency grant funding expenditures/obligations. 3) Enter your net outlays and unliquidated WIA obligations in the appropriate box.

77

4) If you have earned or expended program income, enter the amounts in the appropriate boxes. Also report stand-in costs earned and any rebates or refunds received in their appropriate boxes. 5) Click on Save to save your financial information. If you do not save, your data will be lost. 6) After you have saved your information, click on the Return button to go back to the FS14. 7) You should see that the status of the grant/funding stream on which you just entered data would have been changed to “Updated.” 8) Select your next grant/fund stream on which to report financial data. 9) You do not have to enter all grant expenditure data at one time. 10) We recommend you complete at least one program year’s grant expenditures before sending it for approval/submission or before transmitting it to the State. However, this is not a requirement and you can submit one screen at a time if you choose. The program year includes your PY XX and FY xx grants. FS16 – Grants Expenditure for Youth Funds 1) This data entry screen is for youth funding and is slightly different from the FS15. The net Federal outlays and the unliquidated WIA obligations are entered by out-ofschool youth and in-school youth Summer Employment and Other Activities 2) Enter the appropriate financial information. 3) If you have earned or expended program income, enter the amounts in the appropriate boxes. Also report stand-in costs earned and any rebates or refunds received in their appropriate boxes. 4) Click on Save to save your financial information. APPROVAL AND SUBMISSION OF REPORTS 1) After the financial information has been entered on the grant/funding screens, the person authorized to approve the FSRs should be notified the reports are available in the FSRs for approval and submission. 2) Each screen must be individually approved and submitted. 3) The approving authority should enter the system using the FS11 screen. You should follow the instructions given previously for the FS11 – User Sign On. 4) After clicking the Submit button on the FS11, you will be taken to the FS13. 5) There is a list of open or reopened accounting periods on this screen. If an accounting period you are supposed to review and approve is not on the list, most likely the accounting period has been closed. You will need to contact Grants and Contracts to have the accounting period reopened. 6) On the FS13, select the accounting month and year to be reviewed and approved. 7) The FS14 screen will come up and there will be a list of your open grants for each grant year by funding stream. 8) You must approve each screen (grant funding stream) separately. For each grant year, the administrative funds available have been pooled into one funding stream. 9) You can only approve and submit funding stream reports that have a status of “Updated” or “Reupdated.” Reports in the Initial, Submitted, Amend, and Resubmitted status cannot be approved and transmitted. 10) Click on the Updated or Reupdated screen to be reviewed. 11) Check the information presented and, if correct, click on the Submit button. 78

12) Click on Return to go back to the FS14 and select your next funding stream to be reviewed. Note that the status of the funding stream you just reviewed has been changed to “Submitted” or “Resubmitted.” 13) Continue with the review process until all information has been approved and submitted. CLOSING THE ACCOUNTING PERIOD When Grants and Contracts (GAC) and Special Accounting (SAC) staffs have reviewed the financial information submitted by an LWIA, GAC staff will notify the LWIA if changes or adjustments are necessary to any of the financial information submitted. When the State level review of the FSRs and any necessary adjustments are complete, the accounting period will be closed. Regardless of the status of the WIA report, the accounting period will be closed at the end of the workday on the 1st of the second month after the reporting month, e.g. the January 2004 accounting period will be closed for reporting purposes by the end of the business day on March 1st. The effect of closing the accounting period is, regardless of the status of the grant/funding stream financial reports, grants cannot be updated or submitted. If an area has not requested a later closing date and has not submitted its information, that area will be unable to enter their information for that accounting period. Remember, policy requires that FSRs be submitted by the 20th of the month following the reporting period. Closing the accounting period on the 1st of the second month following the reporting period gives DOL staff and LWIAs 10 days to review, adjust as necessary, and approve WIA financial information. If absolutely necessary, an accounting period can be reopened. It will not be reopened for non-material changes to data already reported which can be adjusted in the subsequent FSR. If an accounting period is reopened, any grants in an incomplete status (i.e. Initial, Updated, Amend, or Reupdated) could be processed by the LWIA. If a grant is in a Submitted or Resubmitted status, LWIAs cannot do anything to the grants. Grants and Contracts could make adjustments again or could send grants back to LWIAs using the amend process.

79

APPENDIX PERIODS

C:

WIA

GRANT

FUNDING

80

LWIA WIA Grant Funding Periods

PY 2002 July 1, 2002 June 30, 2003 June 30, 2004

FY 2003 October 1, 2002 June 30, 2003 June 30, 2004

PY 2003 July 1, 2003 June 30, 2004 June 30,2005

FY 2004 October 1, 2003 June 30, 2004 June 30, 2005

81

LWIA WIA Grant Funding Periods

PY 2004

July 1, 2004

June 30, 2005

June 30,2006

FY 2005 October 1, 2004 June 30, 2005 June 30, 2006

PY 2005 July 1, 2005 June 30, 2006 June 30, 2007

FY 2006 October 1, 2005 June 30, 2006 June 30, 2007

82

APPENDIX D: EXAMPLES OF FARS REPORTS (FOR GDOL-MANAGED AREAS ONLY)

83

12/02/2004 WIA 000 REGION 00 YTD TRANSACTIONS THRU2004/10 PAGE REPORT 1 BY GRANT FOR LOCAL AREA GRANT NUMBER PROJ FISCAL CODE YEAR 5435 AVAILABLE FUNDS 50,191.00 50,191.00 50,191.00 ADULT ADULT ADULT ADULT ADULT ADULT ADULT ADULT ADULT ADULT ADULT 5435 5435 5435 5435 5435 5435 5435 5435 5435 5435 5435 5435 P2003 P2003 P2003 P2003 P2003 P2003 P2003 P2003 P2003 P2003 P2003 000 100 120 140 150 160 180 199 550 555 47,917.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 47,917.00 47,917.00 47,917.00 47,917.00 ADULT ADULT ADULT ADULT ADULT ADULT ADULT ADULT ADULT ADULT ADULT 5435 5435 5435 5435 5435 5435 5435 5435 5435 5435 5435 5435 P2004 P2004 P2004 P2004 P2004 P2004 P2004 P2004 P2004 P2004 P2004 000 100 120 140 150 160 180 199 550 555 48,781.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 48,781.00 48,781.00 UNLIQUIDATED BAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 NET FEDERAL OUTLAYS 50,191.00 50,191.00 50,191.00 8,311.71 214.01 397.68 42.84 591.38 64.43 279.91 389.55 5,499.5143,125.00 47,917.00 47,917.00 47,917.00 47,917.00 0.00 373.57 674.23 81.91 1,026.89 131.27 444.86 651.57 4,533.78 30,956.24 38,874.32 38,874.32

NAME

FUN

BALANCE 0.00 0.00 0.00 39,605.29 214.01 397.68 42.84 591.38 64.43 279.91 389.55 5,499.51 43,125.00 0.00 0.00 0.00 0.00 48,781.00 373.57 674.23 81.91 1,026.89 131.27 444.86 651.57 4,533.78 30,956.24 9,906.68 9,906.68

10-02-11-02-000 ADULT 10-02-11-02-000 ADULT 10-02-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000 10-03-11-02-000

10-03-11-02-000 ADULT 10-03-11-02-000 ADULT 10-03-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000 10-04-11-02-000

10-04-11-02-000 ADULT

84

12/02/2004 WIA 000 REGION 00 YTD TRANSACTIONS THRU 2004/10 PAGE 1 REPORT 2 BY YEAR FOR LOCAL AREA FISCAL YEAR F2001 F2001 F2001 F2001 F2002 F2002 F2002 F2002 F2003 F2003 F2003 F2003 F2004 F2004 F2004 F2004 F2005 F2005 F2005 F2005 P2000 P2000 P2000 P2000 P2000 P2000 P2000 AVAILABLE FUNDS 58,052.00 154,426.00 102,036.00 314,514.00 0.00 175,876.00 372,150.00 548,026.00 0.00 149,176.00 381,836.00 531,012.00 0.00 182,661.00 445,089.00 627,750.00 0.00 0.00 0.00 0.00 51,060.00 51,632.00 160,589.00 50,000.00 226,227.00 0.00 539,508.00 BAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 83,995.57 139,373.44 223,369.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Unliquidated NET FEDERAL OUTLAYS 43,393.00 154,550.00 116,571.00 314,514.00 45,223.06 158,288.08 341,277.22 544,788.36 103,100.00 134,259.00 293,653.00 531,012.00 47,938.28 156,428.33 361,601.32 565,967.93 43,870.433,388.76 8,443.02 32,038.6547,595.77 51,619.23 164,066.00 50,000.00 158,358.90 67,868.10 539,508.00

NAME ADMINISTRATION ADULT DISLOCATED WKR ADMINISTRATION ADULT DISLOCATED WKR ADMINISTRATION ADULT DISLOCATED WKR ADMINISTRATION ADULT DISLOCATED WKR ADMINISTRATION ADULT DISLOCATED WKR ADMINISTRATION ADULT DISLOCATED WKR STRATEGIC YOUTH IS YOUTH OOS

BALANCE 14,659.00 124.00 14,535.00 0.00 45,223.06 17,587.92 30,872.78 3,237.64 103,100.00 14,917.00 88,183.00 0.00 47,938.28 57,762.90 55,885.76 161,586.94 43,870.43 3,388.76 8,443.02 32,038.65 3,464.23 12.77 3477.00 0.00 67,868.10 67;868.10 0.00

85

86

APPENDIX E: SAMPLE ADJUSTMENT AND FIFO WORKSHEETS (FOR GDOL-MANAGED AREAS ONLY)

87

ADJUSTMENTS
JE #
1 2 3 4 5 6 7 8 9 10 11 12

July
YEAR

2004
Object Expenditure Project Function Increase Expenditure Decrease

Description & Explanation

88

FIFO
JE #
1 2 3 4 5 6 7 8 9 10 11 12

July
Description & Explanation YEAR

2004
Object Expenditure Project Function Increase Expenditure Decrease

89

ADJUSTMENTS -- EXAMPLE
JE #
1 2 3 4 5 6 7 8 9 10 11 12

July

2004
Expenditure Expenditure Decrease
$13,000.00 $1,500.00 $1,500.00

Description & Explanation
Close Cost Pool F2003 Close for June 5696 Program Correct JE #12345 JE incorrect in May; move exp from F03 to F02

YEAR
F2003 F2003 F2003 F2002

Object
8090 7710 8090 8090

Project Function Increase
5680 5696 5690 5690 550 550 550 550 $13,000.00

90

FIFO -- EXAMPLE
JE #
1 2 3 4 5 6 7 8 9 10 11 12

July

2004
Expenditure Expenditure Decrease
$407.00 $3,575.00 $3,575.00

Description & Explanation
FIFO Expenditures FIFO exp from P03 to P02 for Youth FIFO Expenditures FIFO exp from F03 to F02 for Dislocated Worker

YEAR
P2002 P2003 F2002 F2003

Object
9110 9110 9110 9110

Project Function Increase
5440 5440 5450 5450 550 550 550 550 $407.00

91

APPENDIX F: FINANCIAL REPORTING SYSTEMS FORMS

REQUEST FOR ACCESS TO FSRs FUND TRANSFER REQUEST FORM APPLICATION FOR ADDITIONAL FUNDS VOLUNTARY DEOBLIGATION FORM

92

REQUEST FOR ACCESS TO FSRS
LWIA # ______ LWIA NAME: __________________________________________

I request that the following staff person be set up for access to the WIA Financial Status Reporting System:
Name: ______________________________________________________ Job Title: ___________________________________________________ Job Function: ________________________________________________ Mailing Address: ______________________________________________ ____________________________________________________________ Telephone Number: ___________________________________________ Fax Number: ________________________________________________ Email Address: _______________________________________________

The level of access should be (check all that apply):

Inquiry Only Entry of Financial Information Approval and Submittal of FSR Information

LWIA Director : ______________________________ DATE ____________________

User ID: ______________

If any information on this form changes, including name, telephone numbers, email addresses, please submit a new contact form to Dianne Sanders. The email address is Dianne Sanders@dol.state.ga.us

93

Georgia Department of Labor Program Year Fund Transfer Request Form
LWIA Name: Provide the information requested and submit to the Director of the Grants & Contracts Unit for consideration. Each transfer requires a separate request form. I. TRANSFER TYPE Check the box adjacent to the type of transfer being requested (check only one box): Transfer from Adult to Dislocated Worker (Whole dollars includes both Program and Administration Funds) Transfer from Dislocated Worker to Adult (Whole dollars includes both Program and Administration Funds) II. TRANSFER AMOUNT Provide the following information for Transfers between Programs: PY/FY Formula Allocation: % of Formula Allocation requested for transfer (up to 30%): $ Amount of Formula Allocation requested for transfer: PY Funds: Transfer $__________from Grant #___________ to Grant #___________________ FY Funds: Transfer $ __________from Grant #___________ to Grant #___________________ III. TRANSFER JUSTIFICATION (see criteria attached)

IV.

LWIA ADMINISTRATOR SIGNATURE: BOARD CHAIR SIGNATURE: _________________________________ CLEO SIGNATURE: __________________________________________ CAREER CENTER MANAGER SIGNATURE______________________

DATE: DATE: _____________ DATE: _____________ DATE:______________

For State use only Date Received by G & C: Request Complete: YES NO

Adjustment Complete (Date/Staff): _____________________________________________________________

94

Criteria for Approval of Funds Transfer 1. The LWIB approves transfer request.

2. The CLEO approves transfer request.

3. Career center manager(s) in the LWIA concur in writing that the need for dislocated worker or adult services is not sufficient to expend all funds in area, e.g., insufficient number of workers need intensive or retraining services, or low-income population does not need additional core, intensive or training services.

4. A transfer excludes submission of a request for additional funds in the funding stream from which funds are being transferred unless there is a significant dislocation, statistically significant change in area population, or other major event in the area. Underestimating the need for services by a particular target population is not considered an emergency situation.

5. The area has or is implementing its most in need/limited funds policy for the funding stream to which funds are being transferred.

6. Area has not requested and received additional funds for the current program year in the funding stream from which funds are being transferred.

7. Requests for transfers will be accepted after October 1 of each program year. Transfers can only be requested for the current program year grants (PY and FY grants).

8. The request will be processed within 10 working days. NOTE: If there are continued requests for transfer of funds from the same funding stream, State staff will provide technical assistance to the LWIA in program design for that target population.

95

Application for Additional Funds (Please submit a separate application for each fund source requested) Date of Request: Local Area Name Local Area Number Amount of Request Fund Source Adult DW Adult Contact: Funds will be used by (date): Youth [CHECK ONE ONLY] DW Youth __________________________________________

Funds will be used to serve: # current WIA registrants receiving training and/or supportive services # current WIA registrants receiving other services Projected # new customers who will receive training/supportive services Projected # new customers who will receive other services

Current Customers
1. All local areas should have a budget in place at the beginning of each program year based on formula allocations, estimated carryover funds, and unexpended statewide activities and rapid response grants. Since July 1 of this program year, explain what circumstances have changed to create this budget shortfall.

2. In which specific line items will additional funds be expended? List by line item and funds requested for each line item.

3. How much of your total request will be expended by the end of this program year?

96

4. What other funding and/or resources have you secured to supplement your existing WIA allocation?

New Customers
1. All local areas should have a budget in place at the beginning of each program year based on formula allocations, estimated carryover funds, and unexpended statewide activities and rapid response grants. Since July 1 of this program year, explain what circumstances have changed to create this funding need.

2. Provide a detailed description of the activities for which additional funds will be used. 3. Does the local area have a waiting list, and if so, how many are waiting and what services are needed? 4. Have you implemented a limited funding policy? Currently, how many customers have been determined eligible (as dislocated workers or low income) and of those customers, how many have been assessed?

5. How much of your total request will be expended by the end of this program year?

6. What other funding and/or resources have you secured to supplement your existing WIA allocation?

If applicable, include any additional information that will help support your request.

______________________________ LWIA Director’s Signature Attach additional sheets, if necessary and send to: Ms. Dianne Sanders, Acting Director Grants Administration Georgia Department of Labor 148 Andrew Young International Blvd., Suite 472 Atlanta, GA 30303-1751 email: Dianne.Sanders@dol.state.ga.us phone: (404) 232-3590 fax: (404) 232-3593 Copy: Local Board Chair Chief Elected Official

_______________ Date

97

VOLUNTARY LOCAL WORKFORCE INVESTMENT AREA DEOBLIGATION LETTER
(Should be on Local Area’s Letterhead)

____________, 2005

Ms. Dianne Sanders , Acting Director Grants Administration Georgia Department of Labor 148 Andrew Young International Blvd. Suite 472 Atlanta, Georgia 30303 Dear Ms. Sanders, The Workforce Investment Board of _________________________ authorizes the Georgia Department of Labor to deobligate funds from the following grant: Name of Administrative Entity _________________________________________________________ Grant Number _____________________ Amount of Grant Award _____________________ Amount of Funds to be Deobligated __________________ Balance of Grant Award __________________________ Percentage of Amount of Deobligation to Grant Award _________________ Should you have any questions or need additional information, please contact _______________ at (___) ___ - ____. Sincerely, Program Name _______________________

_____________________________________ Authorized Signature *

cc: Chief Local Elected Officials LWIA Board Chairperson(s)

* Please Note: Requests for voluntary deobligation of funds should be made by the individual designated to sign grants for the Local Area.
(12/09/04)

98

APPENDIX G: ACRONYMS

99

ACRONYMS ALJ ARB CFDA CFR DOL EEO ETA FARS FSR FY GAAS GDOL HIPAA IFB ITA JTPA JSA LWIA LWIB MOU NOO OJT OMB PBC PY RFP RSA SIC TEGL USDOL WIA Office of Administrative Law Judges Administrative Review Board Catalog of Domestic Federal Assistance Code of Federal Regulation Department of Labor Equal Employment Opportunity Employment and Training Administration Federal Accounting Reporting System Financial Status Report Fiscal Year Generally Accepted Auditing Standards Georgia Department of Labor Health Insurance Portability and Accountability Act Invitation For Bid Individual Training Account Job Training Partnership Act Job Search Assistance Local Workforce Investment Area Local Workforce Investment Board Memorandum of Understanding Notice of Obligation On-the-Job Training Federal Office of Management and Budget Performance-Based Contract Program Year Request for Proposal Resource Sharing Agreement Stand-In Costs Training and Employment Guidance Letter United States Department of Labor Workforce Investment Act

100

APPENDIX H: GLOSSARY

101

GLOSSARY Accrued Expenditures – The charges incurred by the grantee during a given period requiring the provision of funds for (1) the sum of actual cash disbursements for direct charges for goods and services; (2) the net increase or decrease in the amounts owed by recipients; (3) goods and other property received for services performed by employees, contractors, sub-grantees, or other payees; (4) other amounts becoming owed for which no current services or performance is required, such as annuities, insurance claims, and other benefit payments. Contract – A mutually binding legal relationship that obligates the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include, but are not limited to, awards and notices of awards; job orders or task orders issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Equipment – Tangible nonexpendable personal property, including exempt property charged directly to the award, having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. GDOL defines equipment as tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $1000 or more per unit. Equipment includes, but is not limited to, equipment acquired before the publication of these regulations and equipment transferred from prior years. Federal Expenditure Requirements – Federal WIA regulations require that local areas expend all of a Program Year’s allotment by the end of the second year of availability. For PY 2004 funds, this would mean that all Program Year 2004 funds must be expended by June 30, 2006 or be returned to the State for expenditure by the State on statewide projects or for reallotment to local areas that did expend their Program Year 2004 allocation. Federal Obligation Requirements – Federal WIA regulations require that 80% of the funds allocated within each program funding stream be obligated by the end of the first Program Year of their allotment. Administrative funds are not subject to the obligation requirement. This obligation requirement includes funds allocated to both the State and local levels. FIFO – “First In/First Out.” When used in relationship to WIA grant funds, it reflects the flow assumption that an LWIA should pay allowable costs using the oldest available grant funds before using more recent grant funds. For instance, the statement that the LWIA should “fifo” its PY 04 funds means the LWIA should expend all of its PY 04 grant funds by funding stream before using PY 2004 funds. Financial Status Report (FSR) – The monthly financial report from each LWIA. The FSR is used to report expenditures, including accruals, and obligations by WIA funding stream. 102

Grantee – The direct recipient of grant funds from GDOL. A grantee may also be referred to as a recipient. The grantee is the entire legal entity even if only a particular component of the entity is designated in the grant award document. Involuntary Deobligation -- An involuntary deobligation of WIA funds occurs when a local workforce investment area does not meet established State expenditure and/or obligation requirements. GDOL will reduce the grant amount in a specific funding stream based upon the difference between actual and required obligation or expenditure levels. Notice of Obligation (NOO) – The NOO identifies the State’s funding level by funding stream and period of availability. It is the formal notice issued by USDOL to States identifying their allotment levels by funding stream and giving the State authority to issue grants to LWIAs. The State must receive the NOO before it can issue local grants to LWIA grant recipients. Obligations – Defined at 20 CFR 660.300 as the amounts of orders placed, contracts and subgrants awarded, goods and services received and similar transactions during a funding period that will require payment by the recipient or a sub-recipient during the same or a future period. Commitments are to be treated the same way as similar commitments of the recipient’s or sub-recipient’s non-WIA funds, whether as obligations or otherwise (20CFR652 et al., Workforce Investment Act; Final Rules, II. Summary and Background, pg. 49298). Obligations must be supported by valid purchase orders, contracts, and other binding written agreements. Obligations do not include budgeted cost items such as projected staff cost. The appearance of an item in a budget does not constitute an obligation. Outlays – Expenditures of grant funds for allowable administrative and program activities. Outlays consist of charges made to a grant which include (1) the sum of actual cash disbursements and accruals for direct charges for goods and services; (2) the amount of indirect expense incurred; and (3) the amount of unliquidated cash advances and payments made to sub-recipients. Program Income – Income received which is directly generated by a grant or subgrant supported activity or earned as a result of the grant or subgrant. Program income includes (1) income from fees for services performed and from conferences; (2) income from the use or rental of real or personal property acquired with grant or subgrant funds; (3) revenues earned by a governmental or non-profit service provider under either a fixed-price or reimbursable award that are in excess of the actual costs incurred in providing the services; and (4) interest income earned on funds received under WIA Title I. Program Year – Technically WIA operates on a Program Year basis that runs from July 1 through June 30. Federal obligations and spending requirements apply to the funds allocated for and/or during a Program Year and the determination of whether a local area has met these requirements is based on reported expenditures as of June 30. Program Year Funds – USDOL obligates Program Year funds to States via a Notice of Obligation (NOO) at three different points in time. 103

Youth Funds – The youth fund allotment for a Program Year is awarded and available to expend in advance of the Program Year, on April 1. For example, Program Year 2004 youth funds were available April 1, 2004. All of the youth funds are awarded from the same Federal Fiscal Year (FFY) availability and are awarded to local areas in one grant. All of the youth funds awarded for a Program Year are designated as PY grant funds and never as FY funds. • Adult and Dislocated Worker Funds – The adult and dislocated worker allotments for a Program Year are awarded to States at two different times from different Federal Fiscal Years. Approximately 25% of the adult allotment and 33% of the dislocated worker allotment are awarded July 1 of the Program Year. The adult and dislocated worker funds awarded to local areas July 1 are PY funds, coming from the same FFY availability as the youth funds. The remainder of the adult and dislocated worker allotments for a Program Year is awarded to States October 1 of the Program Year. These funds are from a different Federal Fiscal Year and designated as “FY” funds. Because a single Program Year’s WIA funds are awarded to the States from different FFYs, each source of funds must be awarded and tracked separately. In essence, this means that a local area receives 5 different grants (1 youth, 2 adult, and 2 dislocated worker) for/during a Program Year. The total amount of these five grants is considered the total Program Year funds. Obligation and expenditure requirements apply to the total Program Year funds. FUNDING STREAM FUND SOURCE EFFECTIVE DATE OBLIGATED TO STATES April 1 July 1 July 1 October 1 October 1

Youth Funds PY Adult Funds PY (Appr. 25%) Dislocated Worker PY (Appr. 33%) Adult Funds FY (Remainder of area’s Program Year allocation) Dislocated Worker FY (Remainder of area’s Program Year allocation)

Recipient – the entity to which a WIA grant is awarded directly from the Georgia Department of Labor to carry out the WIA program. Stand-In Costs – Costs paid from non-Federal sources which a grant recipient or subrecipient proposes to substitute for Federal costs, which have been disallowed as a result of an audit or other review. In order to be considered as valid substitutions, the costs must have been reported by the grant recipient on the monthly FSR as uncharged costs under the same grant and in the same program year in which the disallowed costs were incurred. The stand-in costs must be incurred for allowable WIA activities, accounted for in the financial management system, and included within the scope of the audit report. Sub-recipient/Sub-grantee – the legal entity that is accountable to the recipient for the use of the WIA funds provided such as vendors and contractors.

104

Unliquidated Obligations – For reports prepared on a cash basis, the amount of obligations incurred by the grantee that has not been paid. For reports prepared on an accrued expenditure basis, they represent the amount of obligations incurred by the grantee for which an outlay has not been recorded. Vendor – A dealer, distributor, merchant, or other seller providing goods or services that are required for the conduct of a Federal program. These goods or services may be for an organization’s own use or for the use of beneficiaries of the Federal program. Voluntary Deobligation – Voluntary deobligation occurs when a grant recipient determines that the level of funds available to the area by formula allocation is greater than the funds needed in the area and the grant recipient wishes to reduce its obligational authority for funds already awarded. Voluntary deobligations should occur as soon in the grant period as the grant recipient identifies it cannot obligate or expend all grant funds. Voluntary deobligation of local WIA funds does not affect future grant allocations. With the approval of the local Workforce Investment Board and the Chief Elected Official, an area may request voluntary deobligation by GDOL of WIA funds at any time. The voluntary deobligation can be in any or all funding streams. WIA funds available because of a voluntary deobligation will be awarded to other local areas.

105