COOPERATIVE AGREEMENT FINANCIAL PROCEDURES

SUBJECTS Obligation of Agreements Cost Principles Payment Procedures Reconciliation Final Close Out

OBLIGATION OF AGREEMENTS DOD FMR Volume 3 Chapter 8 ARMY – NGR 5-1/ANGI , Chapter 12, and DFAS IN 37-1, Chapter 8 AIR – NGR 5-1/ANGI , Chapter 32

FULL VS INCREMENTAL FUNDING AIR - Fully Funded ARMY – Fully Funded (Preferred)

OBLIGATION OF AGREEMENTS Under a Continuing Resolution Authority (CRA) Under a Separate State and Federal Fiscal Years

FUNDING “CASH” Quarterly Authority Annual Budget Authority Allotment Annual Funding Program Maximum Funding Limitation Estimated Cost Federal Share (100%)$ 5,000, $ 5,000, Federal Share (75%)$_______________________$_______________________ Federal Share (50%)$_______________________$_______________________ Federal Total$_______________________$______________________ State Share (50%)$________________________$_______________________ State Share (25%)$________________________$_______________________ Program Income$_______________________ State Total$________________________$_______________________ Grand Total$________________________$_______________________ In-Kind Assistance. COOPERATIVE AGREEMENT FUNDING

Program Manager/Air Comptroller Submits request to setup initial or modify CA GOR Reviews request/Prepares CA or modification State Comptroller set up data in State Accounting System Federal Accounting ensures obligation is posted in accounting system FLOWCHART SHOWING OBLIGATIONS OF COOPERATIVE AGREEMENTS USPFO and TAG Signature GOR makes distribution Federal PM/RA sets up informal ledger. Army PM enters reservation in AFCOS

COST PRINCIPLES GENERAL POLICY ALL COSTS FOR WHICH REIMBURSEMENT IS SOUGHT MUST BE SUPPORTED AND DOCUMENTED.

COST REIMBURSEMENT RULES INDIRECT COSTS DIRECT COSTS –ALLOCABLE COSTS –ALLOWABLE COSTS –REASONABLE COSTS –AVAILABILITY OF FUNDS

INDIRECT COSTS Incurred for a common or joint purpose benefiting more than one cost objective Cost not readily assignable to the cost objectives specifically benefited National Guard appropriated funds are prohibited from being used to reimburse indirect costs, except for fringe benefits, under a Grant or Cooperative Agreement.

DIRECT COSTS Costs that can be identified directly with the performance of a Cooperative Agreement Must meet the “consistent treatment rule” Must meet the cost reimbursement rules

ALLOCABLE Cost must be allocable to the Cooperative Agreement supported program, project or facility. The cost of goods or services purchased by the state must be used to support the Cooperative Agreement supported program.

ALLOWABLE The cost must be allowable under applicable laws, regulations and policy. This includes Federal, DoD, Army, Air Force and National Guard policies concerning the use and management of federal funds.

REASONABLE Cost must “not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.” OMB Circular A-87, Appendix A

AVAILABILITY OF FUNDS Even of the State Military Department incurs costs that are authorized, these costs cannot be reimbursed unless sufficient funds have been obligated to the Cooperative Agreement.

BURDEN OF PROOF The “burden of proof” as to the allocability, allowability and reasonableness of costs for eligibility for reimbursement rests with the State

FINAL AUTHORITY The final authority in determine whether a particular costs meets the costs principle rest with the USPFO/GRANTS Officer.

COST PRINCIPLES EXAMPLES

EXAMPLE #1 The State’s Military Department is billed for remote connectivity to the Department of Administration. This service is needed to have access to the State Accounting system and the internet. DIRECT OR INDIRECT?

EXAMPLE #2 Payment of a license fee to certify a plumber who is employed under a Cooperative Agreement Appendix. DIRECT OR INDIRECT?

EXAMPLE #3 All State Agencies, to include the Military Department, will be charged for each funding line of any activity the State Treasurer processes. DIRECT OR INDIRECT?

EXAMPLE #4 The State Military Department is charged for background checks on new State hires under a Cooperative Agreement. DIRECT OR INDIRECT?

EXAMPLE #5 Under the Single Audit Act” the State Military Department contracted with a local CPA firm to conduct an audit of the Cooperative Agreements. The State wishes to pass this cost on a pro rata basis to each Cooperative Agreement. DIRECT OR INDIRECT?

EXAMPLE #6 The State Military Department is assessed a yearly charge on the Department’s per cent of mail activity. This reimbursement helps offset the operation of the State’s Central Mail Unit. DIRECT OR INDIRECT?

EXAMPLE #7 Overtime pay for security guards. DIRECT OR INDIRECT?

EXAMPLE #8 Payment to State employees who are covered under a Cooperative Agreement for making a suggestion that saves funding for the Military Department. DIRECT OR INDIRECT?

EXAMPLE #9 Provide training to State employees who are authorized and employed under a Cooperative Agreement. DIRECT OR INDIRECT?

Travel of State Employees JFTR, Appendix E, Part I, B.2. JFTR, Appendix E, Part I, D JFTR, Appendix E, Part I, E OMB Circular A-87, Attachment B, Paragraph 41

Travel of State Employees State Employees Must Travel on State Orders Feds Reimburse the State up to the JFTR Allowances The Use of Reimbursable Individual Travel Orders is Prohibited

PAYMENT OPTIONS Reimbursement Advance Payment

PAYMENT REFERENCES ARMY: NGR 5-1/ANGI , Chapter 12 AIR: NGR 5-1/ANGI , Chapter 32

REIMBURSEMENT PROCEDURE State funds expended State submits for reimbursement Federal Program Manager/Resource Advisor must: Verify documentation for accuracy Certify charges are valid and are authorized for payment Forward to ARNG(Pay/Exam)ANG-FM

DFAS processes EFT payment to State Military Department Contracts with Vendor Pays Vendor Prepares request for Reimbursement and submits to Federal PM/RA Federal PM/RA request supplies, etc Federal PM/RA reviews request and certifies Forward request to Federal comptroller Federal comptroller ensures funds are obligated to cover reimbursement Reimbursement processed through CAPS as EFT Payment REIMBURSEMENT FLOWCHART

ADVANCE PAYMENT DOD FMR Volume 12 Chapter 5 DOD FMR Volume 10 Chapter 19 NGR 5-1/ANGI Chapter 12 (Army) NGR 5-1/ANGI Chapter 32 (Air)

ADVANCE PAYMENT State Comptroller may request an advance Advance may be required by State statute Advance is based on cash flow and reimbursement cycle time

HANDOUT

ADVANCE PAYMENT USPFO APPROVE/DISAPPROVE ARMY - Copy furnished to ARNGRC NGB-ARC At year end outstanding Advances must be returned At anytime the Advance cannot exceed the unpaid Federal portion of the Cooperative Agreement

Payment to be made within 7 days if EDI & EFT used DOD FMR Volume 10 Chapter 19, DOD FMR Volume 10 Chapter 7, G Advance and Reimbursement Payments

CASH MANAGEMENT IMPROVEMENT ACT (CMIA) 31 CFR 205 Federal agencies must make timely fund disbursements and grant awards to States. States and Federal agencies must minimize the time between the advance of Federal funds to States and the State presenting settlement documentation or check to close advance.

CASH MANAGEMENT IMPROVEMENT ACT (CMIA) 31 CFR 205 States are entitled to interest from the Federal Government for the time State funds are expended for program purposes pending Federal disbursement. The Federal Government is entitled to interest from the States for the time Federal funds are in State accounts (advance) pending the State presenting settlement documentation or check to close advance. Treasury may charge responsible Federal agencies if they are found to be flagrant or repeatedly incur Federal interest liabilities.

RECONCILIATION ARMY: DFAS IN 37-1, CHAPTER 27 AIR/ARMY: DoD FMR R Vol 3 Chap 8 Tri-annual reviews

RECOMMENDED RECONCILIATION Monthly Status letter from State Comptroller Federal Program Manager reconcile to include outstanding items Accounting Branch reconcile obligations and reimbursements

RECOMMENDED RECONCILIATION End of Year State Comptroller, Federal Program Manager, Federal Accounting Branch meet Identify shortage/excess funds

FINAL SETTLEMENT/CLOSE OUT OF COOPERATIVE AGREEMENTS

ARMY - NGR 5-1/ANGI CHAPTER 12 AIR - NGR 5-1/ANGI CHAPTER 32REFERENCES

MY CONCERN IS NOT NECESSARILY HOW LONG AN AGREEMENT IS OPEN, BUT RATHER WE DON’T KNOW WHY THE AGREEMENT IS OPEN

CLOSE OUT DEFINED When the state has submitted their FINAL request for reimbursement the Appendix is closed

THE USPFO IS REQUIRED TO CLOSE OUT THE AGREEMENTS NLT 90 DAYS AFTER THE END OF THE FEDERAL FISCAL YEAR

QUESTION? FROM THE STATES PERSPECTIVE, WHAT IS REQUIRED IF THERE ARE PURCHASES THAT REMAIN UNLIQUIDATED AND A REQUEST FOR RE- IMBURSEMENT TO THE GRANTS OFFICER IS REQUIRED?

The State Resource Manager must submit a request for extension.

Federal Program Managers must have all requests for services, supplies, etc to the State Comptroller by established cutoff. NLT 30 Sep State Comptroller awards contracts.

REQUESTS FOR EXTENSION MUST CONTAIN THE FOLLOWING ELEMENTS Detailed listing of unliquidated obligations. Anticipated date of liquidation.

GRANTS OFFICER APPROVES OR DISAPPROVES REQUEST (If approved, Cooperative Agreement remains open until the last item is liquidated or until further extensions are granted)

State continues to submit Request for Extensions until all outstanding obligations are liquidated.

FINAL CLOSEOUT Final Request for Reimbursement received from the State. Request from Federal Program Manager to modify agreement to actual amount of reimbursement. Final Modification completed by GOR.

COST NOT DISCLOSED State Comptroller submits separate request for reimbursement to Grants Officer. Grants Officer validates request and determines source of funding if approved.

MANAGEMENT CONTROLS Are the CA’s incrementally or fully funded and have appropriate obligations been made? Have the Program Manager, Federal Accounting and State Comptroller reconciled financial data quarterly? Have prior year cooperative agreements been closed out within the 90 day period, or request for extension granted? Ensure advance to State does not exceed the amount of the agreement and is based on a cash flow cycle.

MANAGEMENT CONTROLS Has advance been collected in a timely manner? Do requests for reimbursements meet the cost reimbursement rules of allowable, allocable, reasonable and availability of funds? Has the federal Program Manager or Assistant USPFO’s certified request for reimbursement prior to submitting to the Finance Office for payment?

QUESTIONS