Policy
FIACCT 14-06_17 Grant Accounting – CMIA – Reimbursement of Direct Costs of Implementation
Effective: July 1, 1994
Revised:
Purpose
This policy describes the type and limit of compensation available, and the requirements that need to be fulfilled in order to be partially reimbursed by the federal government for implementing the Cash Management Improvement Act.
Definitions
Direct costs of implementing the Cash Management Improvement Act
Those costs necessary for the development and maintenance of clearance patterns and those costs necessary to perform the actual calculation of interest liabilities. Direct costs do not include expenses incurred for upgrading or modernizing accounting systems.
In Utah’s treasury-state agreement, the interpretation of direct costs has been defined to include: “Costs incurred in compiling and analyzing data related to interest calculation and in preparing and transmitting the State’s Annual Report to the Financial Management Service.
Other examples of qualified direct costs are: computer programming & program maintenance for developing clearance patterns, CPU charges to run clearance pattern programs, printing and paper costs, disk storage charges for data and programs, and salary & benefits of persons who perform interest calculations, run clearance pattern programs, do sampling procedures, and prepare the Annual Report.”
Policy
A. Utah will be compensated annually for the direct costs of implementing the Cash Management Improvement Act, subject to the following conditions and limitations:
1. Utah must have entered into a current treasury-state agreement with the Financial Management Service of the U.S. Treasury.
2. The Division of Finance must submit a claim for the direct costs incurred by all state entities during the previous fiscal year with its annual report.
3. Direct costs in excess of $50,000 in any year are not eligible for reimbursement, unless Utah can justify to the Financial Management Service of the U.S. Treasury that it would be unable to develop clearance patterns or perform the actual calculation of interest liabilities without incurring such costs. This $50,000 limit applies to the aggregate total direct costs of all state entities listed in Utah’s treasury-state agreement, whether or not the entities use the State’s FINET accounting system.
4. The Financial Management Service of the U.S. Treasury will review all direct cost claims for reasonableness. Unreasonable cost claims, as determined by the Financial Management Service, will not be reimbursed.
5. The Financial Management Service will effect direct cost reimbursement by reducing the state interest liability and adjusting the federal interest liability for each state. Even reasonable and approved direct cost claims may not be fully reimbursed if the U.S. Treasury does not receive enough funds each year
from the interest liabilities of all states to cover the direct costs claims of all states. The aggregate federal
interest liability to all states cannot increase just to pay direct costs claims.
6. In the event that Utah does not receive full reimbursement for the total amount of its direct cost claim, the actual amount of reimbursement received will be allocated to all state entities listed in Utah’s treasury- state agreement. This allocation will be based on each entity’s percentage of the direct costs which were approved by the Financial Management Service of the U.S. Treasury.
7. The portion of direct cost reimbursement allocated to state entities on the FINET accounting system will be netted against the interest liabilities described in the CMIA–Federal & State Interest Liabilities policy in this section of this manual and received as unrestricted interest earnings into the State’s general fund. Department funds will not be credited.
8. The portion of direct cost reimbursement allocated to state entities not using the FINET accounting system, will be received by the State and then given to the state entity as soon as is practical.
B. Throughout each year, all state entities must maintain detailed documentation to substantiate any claim for reimbursement of direct costs. This includes detailed tracking of actual time spent on allowable direct cost activities as defined in this policy.
C. All other costs, not included in the direct costs claim, incurred by state entities to implement the Cash
Management Improvement Act are subject to the procedures and principles of OMB Circular A-87 and may be included in the development of the statewide cost allocation plan.