Federal Assistance Manual Chapter 1-95

CHAPTER 1-95 ACCOUNTING FILES AND SUPPORTING DOCUMENTATION

• 1-95-00 Purpose
  
• 1-95-10 Documentation Required to Support Nonconstruction Costs
  
• 1-95-20 Documentation Required to Support Construction Costs

1-95-00 PURPOSE

This chapter provides general standards for establishing and maintaining recipient accounting files and documentation to support costs for OSM grant or cooperative agreement supported activities.

1-95-10 DOCUMENTATION REQUIRED TO SUPPORT NONCONSTRUCTION COSTS

1. A recipient shall maintain financial records documenting the following types of costs.
   1. Personnel
      1. Compensation for personnel includes all remuneration, paid currently or accrued, for services rendered during the period of performance under the grant or cooperative agreement.

      2. Supporting Documents: Amounts charged to a grant or cooperative agreement for personnel must be based on payrolls that have been documented and approved in accordance with generally accepted accounting practices. Payrolls must be supported by time and attendance (or equivalent) records of individual employees. Salaries and wages of employees chargeable to more than one grant, cooperative agreement or budget/cost category within a grant must be supported by appropriate time distribution records. The method used should produce an equitable distribution of time and effort.

   2. Fringe Benefits
      1. Fringe benefits are allowable as a direct cost (if not included as an indirect cost) in proportion to the salary charged to the grant or cooperative agreement.

      2. Supporting Documents: Amounts charged to the grant or cooperative agreement must be based on a formally established and consistently applied organizational policy.

   3. Travel
      1. This category includes per diem reimbursements for traveling, personnel transportation charges, and reimbursement for authorized use of personally-owned automobiles. Travel costs must not be proposed at rates in excess of the current rate for Federal employees.

      2. Supporting Documents: Travel expenditures must be supported by evidence showing that travel costs were properly authorized, as well as a statement of expenses submitted by the traveler.

   4. Equipment
      1. This category includes the cost of equipment to be purchased for regulatory or reclamation purposes, office machines, furniture and fixtures, computers and copiers and any other special equipment. OSM's definition of nonexpendable equipment means an article of nonexpendable tangible personal property having a useful life of more than one year, and an acquisition cost of $5,000 or more per unit.

      2. Supporting Documents: Expenditures for the purchase of such equipment must be supported by quotations, approved purchase orders and/or contracts, receiving reports, purchase requisitions, and vendor's invoices.

   5. Supplies
      1. This category includes such expendable items as stationary, postage, and small items of equipment.

      2. Supporting Documents: Expenditures for consumable supplies must be supported by vendor's invoices, receipts, or other evidence that funds were disbursed for grant or cooperative agreement purposes.

   6. Contractual (Services and Consultants)
      1. This category includes payment to approved consultants and experts for professional and technical services, such as accounting or legal assistance, and payment for services rendered by other qualified individuals or organizations.

      2. Supporting Documents: Whenever feasible, consultant and contract fees paid will be substantiated by proposals from more than one reputable consultant Moreover, in a cost type contract, the recipient or a designated representative shall have reviewed the contractor's records and shall include a copy of all resultant reports in its grant or cooperative agreement files. Further, billings for consultants and contract services must provide a clear statement of the services performed and, if appropriate, the number of person-days of service.

   7. Construction
      1. This category includes payments for the cost of minor leasehold improvements. Do not enter the AML project construction costs.

      2. Supporting Documents: Expenditures for leasehold improvements must be supported by vendor's invoices, receipts, or other evidence that renovation was accomplished using OSM funds and the method used to calculate the cost.

   8. Other Direct Costs
      1. Other direct costs includes such items as transportation of equipment, repairs, utilities, telephones and telegraph, publications and printing, subscriptions, and other miscellaneous expenses related to the grant or cooperative agreement, but which do not fit into one of the other direct cost categories.

      2. Supporting Documents: Expenditures for other direct costs must be supported by vendor's invoices, receipts, or other evidence that the funds were disbursed for grant or cooperative agreement purposes.

      3. Space Costs and Rentals

         Space costs and rentals must be confined to the costs of renting or leasing space for use by the recipient including a lease/purchase agreement, plus normal maintenance and operation costs required to make or maintain buildings usable for program purposes.

      4. Supporting Documents: Costs for procurement of space must be substantiated by a rental or lease agreement which includes the following items:
         1. description of space to be leased;
            
         2. purpose for which it is to be used;
            
         3. period of lease (limited to grant period);
            
         4. options to renew lease;
            
         5. utilities, insurance, and other services to be furnished to lessee;
            
         6. rate or rental, depreciation, or use allowance;
            
         7. method and time of payment;
            
         8. other conditions required of lessor or lessee(recipient); and
            
         9. signatures of both parties and witnesses.

   9. Indirect Costs
      1. Indirect costs are those that are: (1) incurred for a common or joint purpose, benefiting more than one cost objective (e.g., grants, cooperative agreements, projects, contracts, activities); and (2) not readily assignable to specifically benefited cost objectives without an effort disproportionate to the results achieved.

      2. Supporting Documents: Indirect costs must be supported by an analysis of the cost elements composing the indirect pools, and an explanation of the structure of the distribution base and the cost allocation rationale. The State/Tribal agency should have on file the most recently negotiated Indirect Cost agreement.

   10. Program Income
       1. Program income includes, but is not limited to, income earned during the grant performance period from the sale of publications, the sale of real or personal property purchased with grant funds, the sale of services under a grant (such as the sale of computer time), permit fees, income earned from investment of permit fees or other program income, income from royalties received as a result of copyrights or patents produced under the grant, and insurance premiums under the subsidence insurance program. Program income does not include income from fines, penalties, taxes or forfeitures.

       2. Supporting Documents: Financial records of the receipt and disposition of grant and cooperative agreement related income must be maintained.

1-95-20 DOCUMENTATION REQUIRED TO SUPPORT CONSTRUCTION COSTS

1. A recipient shall maintain financial records documenting the following costs.
   1. Administration Expense. This category includes the cost for administrative expenditures including such items as travel, legal fees, rental of vehicles and any other expense incurred in the administration of a construction project.

   2. Preliminary Expense. This category includes the cost pertaining to the work of locating, conducting field investigations, compiling reports of investigation, real estate activities, planning and design, surveys and maps, sinking test holes, and other work required prior to actual construction.

   3. Land Structures, Right-of-Way. This category includes the costs which are directly associated with the acquisition of land, existing structures, and related right-of-way.

   4. Architectural Engineering Basic Fees. This category includes the basic fees for architectural and engineering services.

   5. Other Architectural Engineering Fees. This category includes costs for other architectural engineering services such as surveys, tests, and borings.

   6. Project Inspection Fees. This category includes costs for construction monitoring, inspection and audit fees of construction and related programs.

   7. Land Development. This category includes costs associated with the development of land where the primary purpose of the grant or cooperative agreement is land improvement. Site work normally associated with major construction should be excluded from this category and reported as construction and project improvement.

   8. Relocation Expenses. This category includes costs incurred to provide relocation advisory assistance, and the net amounts for replacement housing (last resort). Do not include amounts needed for relocation administration expenses; these amounts should be included in Administrative Expense.

   9. Relocation Payments to Individuals and Business. This category includes costs for relocation payments made by the recipient to displaced persons, farms, business concerns and nonprofit organizations.

   10. Demolition and Removal. This category includes costs for gross salaries and wages of employees of the recipient who will be directly engaged in performing demolition or removal of structures from developed land. This category includes the cost of demolition or removal of improvements on developed land under a third-party contract. Reduce the costs on this line by the amount of expected proceeds from the sale of salvage.

   11. Construction and Project Improvement. This category includes costs for the actual construction of, addition to, or restoration of a facility.

   12. Equipment. This category includes costs for equipment both fixed and movable. For example, include amounts for permanently attached laboratory tables, built-in audio visual systems, movable desks, chairs, and laboratory equipment.

   13. Miscellaneous. This category includes construction-related costs for items not specifically mentioned above. Report indirect costs on this line.

   14. Program Income. This category is to include the amount of the program income that was earned during the grant or cooperative agreement period and applied to the construction project.

2. Supporting Documents
   1. Personnel costs must be based on payrolls that have been documented and approved. Travel expenditures must be supported by evidence showing that travel costs were properly authorized, as well as a statement of expenses submitted by the traveler. Other expenditures must be supported by contracts, receiving reports, purchase requisitions and vendor's invoices.

   2. Grantees shall maintain in their offices documentation adequate to trace project and project support costs to individual sites, where possible, and to justify and support the allowability of costs reported for AML Projects Costs (Water Supply and Non-Water Supply), Non-Coal Project Costs, and Emergency Program Project Costs on the form OSM-49.

FEDERAL ASSISTANCE MANUAL
January 2, 1998