VIII. BUDGETS AND ACCOUNTS
Much of the information contained in this section originates from OMB Circulars and federal law pertaining to Lead Center grant recipients and subcenters of the SBDC grant. This summary and overview is not meant to and cannot replace a thorough review and understanding of those documents. In any case, where there is confusion or apparent conflict, please contact the Lead Center for clarification.
The Lead Center of the CSBDC, through the Office of Economic Development & International Trade (OEDIT), receives its funding from SBA via a Notice of Award and a Letter of Continuation. The terms of the grant award are listed in the current year’s Program Announcement and Notice of Award. The Lead Center cannot contract with local host institutions to authorize an SBDC site until an annual Notice of Award has been received guaranteeing the Letter of Continuation. Federal funds are awarded to the Lead Center for a 12-month period beginning January 1st of each year. Only costs resulting from obligations within the funding period must be charged to that period, even if funds or expenses remain from the previous period. Accruals can be used to account for expenses that occurred in a previous year but were billed in a new year. The Lead Center can only request a periodic, typically quarterly, “draw down” of funds in an amount required to reimburse actual costs. The Lead Center may request approval for carryover of funds from SBA; however, subcenters are strongly urged to use their annual allotment of funds by the end of each calendar year.
Local subcenters request reimbursement through the submission of reports that verify federal, cash match and in-kind match activity on a quarterly basis and are due 15 days after the end of the quarter. Payments made by the Lead Center to local centers are reimbursements for costs already expended. The state reserves 35 days from the date the final report is received to send a check or authorize an interagency transfer of funds. Supporting documentation for any invoiced item or revision requests to the quarterly reports may occur before the reimbursement is made. If there are errors on the financial reimbursement request, then the Lead Center will communicate with the local center until the discrepancies are resolved. A check or interagency transfer of funds cannot occur until the reimbursement request is correct.
Funds from a contract award should be deposited and maintained in insured accounts and tracked separately from host accounts. Local centers and their host institutions must be able to account for the receipt, obligation and expenditure of funds given under SBDC contract/interagency agreement. Therefore, organizations must be able to fully account for the funds separately.
The State Director has sole authority over the amount of funds made available to local centers and any supplemental funds offered to centers. The budget allocation process takes into consideration a variety of factors, including prior SBDC activity, economic impact, service area demographics, staffing levels and availability of matching funds. All centers will be notified by the Lead Center when the opportunity for supplemental funding is available. The network will be advised of activities affecting SBA and state funding at the director’s meetings.
Each summer, the Lead Center requests budget proposals from local centers for inclusion in the CSBDC annual grant application. The budget details proposed expenditures for the upcoming year. The budget justification is divided into cost categories and breaks out the amount of match the center is required to provide. A breakdown of sources of cash match is required as part of the budget proposal as well as an itemized listing of projected program income anticipated by the subcenter for the year. In the budget justification, subcenters are required to provide as much detail as possible on potential expenditures. This allows the Lead Center to pre-approve expenditures to be made in the grant award year. Any expenses at or above $500.00 that are made during the grant award year that are not included in the budget, must be approved by the State Director. This can be in the form of an email. See Appendix H-1 for a Sample Standard Form424 Budget Sheet with the Budget Justification.
Statewide network budgets will be under the control of the Lead Center. The SBA allows the Lead Center budgetary flexibility for transferring funds from one category to another as long as budgetary line item charges do not exceed 10% of the total program budget. SBA approval is required for transfers, which exceed 10%. If a subcenter anticipates that a line item may exceed 10% variance, it must notify the Lead Center. This can be in the form of an email including an explanation of why the variation is occurring (i.e. Staff vacancies will alter Personnel & Fringe).
Federal regulations require state SBDCs to provide 1:1 matching funds for each federal dollar awarded. Fifty percent of the total match must be cash to ensure that there is adequate funding for Colorado’s program. The remaining 50% may be provided through any allowable combination of additional cash, in-kind contributions or in-kind indirect costs. The matching requirement is also a requirement of all subcenters. At a minimum, the cash and in-kind match required must be committed in writing by the sponsor to be counted as match. Centers that are not achieving cash match requirements will be reviewed by the Associate Director prior to continued reimbursement of SBA expenditures. All match funds must be disbursed regardless if the subcenter spends all of the allocated grant dollars. This requirement is clearly depicted in subcenter grant agreement contracts and interagency agreements. SeeAppendix B-3 for a sample Non-State Contract Agreement. Please note that while Interagency Agreements are very similar, they are slightly different due to the nature of being a State of Colorado Entity.
Matching funds already committed or reported as SBDC match cannot be applied to any other federal grant. Centers are required to maintain written records that fully document their match requirements and sources. Appropriate cost documentation may include canceled checks, invoices, receipts or in-kind vouchers.
Costs fall into two categories: indirect and direct. This distinction is the key to determining which match category an expense falls into. All expenses charged to the SBDC grant must be allocable by being either a direct or an indirect cost. The Colorado SBDC Network is not allowed to take indirect costs out of the grant dollars. In-kind indirect charges will be allowed if negotiated prior to the calendar year budget period and recorded in the match section of the budget. These costs are detailed further in this section, which is a quick summary of the regulations that must be followed. However, centers are encouraged to thoroughly review the rules and regulations set forth in the 13 Code of Federal Regulations, Part 143 as applicable, the regulations set by OMB Circular Title 2, Subtitle A, Chapter II, Part 200.
1. Indirect Costs
The CSBDC does not allow indirect cost charges to Grant, Cash Match, Program Income, Restricted Funds, Leading Edge or any auxiliary SBDC accounts. This includes all funds that are raised through training programs, tuition, sponsorships and monetary gifts for the SBDC program.
Waived indirect costs may be used as in-kind contribution for match only, but must be pre-approved by the Lead Center and SBA during the budget application process. Waived indirect costs are that portion of indirect costs waived by the applicant institution (based on the current indirect cost recovery rate agreement). This amount may be counted as “in-kind match”. When all allowable costs are waived by the applicant and applied to matching funds, 100% of the grant funds will be allocated to program delivery.
Indirect costs include those costs which (negotiated and approved only as in-kind match funding):
· Indirectly facilitate program delivery, and;
· Are incurred for common or joint objectives and therefore cannot be assigned readily and specifically to a particular sponsored project.
Non-profits should determine allocation of indirect costs by using one of four methods described in OMB Circular Title 2, Subtitle A, Chapter II, Part 200. Indirect cost categories may consist of institution depreciation and use allowance, operation and maintenance, general administration and general expenses, departmental administration, sponsored projects administration and the library. Generally, institutions of higher education develop an indirect cost recovery rate that includes these expenditures. Please see discussion of in-kind match in Section VIII, B. 3. In-Kind Match. A maximum of 20% of the funds received by the network as part of the SBDC grant may be allocated to indirect costs as an in-kind donation. This puts a cap on sub-center rates depending on where the network stands as a total and gives the Lead center the right to reduce the amount allowed for each center.
An Indirect Cost Rate Agreement must be negotiated with the Lead Center and host organization prior to the submission of the calendar year budget. This agreement will be updated on an annual basis during the same time period of the budget process. Any indirect costs that were not negotiated with the Lead Center will be denied.
2. Direct Costs
Direct costs include those costs which:
· Directly facilitate program delivery as opposed to overhead costs; and
· Can be directly assigned to the CSBDC program relatively easily and with a higher degree of accuracy.
Identification with the CSBDC rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect costs of sponsored agreements like the SBDC grant. 100% of the funds received by a host institution as part of the SBDC contract or interagency agreement must be allocated to direct costs of program delivery.
Typical costs charged directly to a sponsored agreement are:
· The compensation of employees for performance of work under the Scope of Services, including related fringe benefit costs;
· The costs of materials consumed or expended in the performance of the work;
· Other items of expense incurred for the SBDC program, to be approved by the State Director prior to authorization.
The cost of materials supplied from stock or services rendered by other institutional service operations may be included as direct costs, provided that these items are consistently treated by the organization as direct rather than indirect costs, are charged under a recognized method of computing actual costs, and conform to generally accepted cost accounting practices.
B. MATCH FUNDS
Although local centers and their hosts are not direct recipients of the federal contract, they must abide by the policies stated within the OMB Circulars. It is stated that all contributions, including cash and third party in-kind, shall be accepted as part of center match when such contributions meet all of the following criteria:
Are verifiable from the host and/or center records
Are not included as contributions for any other federally assisted program or project
Are necessary and reasonable for proper and efficient accomplishment of project or program objectives
Are allowable under the applicable cost principles
Are not paid by the federal government under another award, except where authorized by federal statute to be used for cost sharing or matching
Are provided in the approved budget form
Conform to other provisions of the circular as applicable
· All matches are subject to the same standards of necessity, reasonableness, and allow ability that apply to the use of Federal funds
1. Unallowable as Match
The following may not be used as sources of matching funds, either cash or indirect, under any circumstances.
a. Uncompensated Student Labor
This means that no class, student participating for credit, or internship program participants may be counted as match. If the center can demonstrate that the individual is volunteering his/her services independent of any college or university and is in no way receiving credit for participation in CSBDC activities, that individual’s time may be counted as match.
b. SCORE Volunteers
c. Program Income (or fees collected from small businesses)
d. Funds or Indirect or In-Kind Contributions from other Federal Sources
2. Cash Match
According to interviews with the Inspector General’s Office auditors, the key to determining what constitutes cash match is whether or not cash actually exchanged hands. This holds true for whether the program itself was given cash to pay for services or if the host institution of an SBDC pays a bill for a service on behalf of the center. However, local centers and their hosts are strongly encouraged to strive to make cash match conduits as obvious and clear as possible to readily see “cash transactions by the center”. Examples:
· If the host is paying rent on a separate facility owned by a separate entity for an SBDC, the host should budget and define the funds for rent as coming out of the SBDC budget and to the separate entity. This is clearly cash match.
· If the host is paying rent on a building that is specifically and clearly only for the SBDC’s use, the host should arrange for an interagency transfer or other transmission of funds to the clearly separated account funds of another division of the host for rent on that facility. This is a clear conduit for cash match.
· Conversely, if the SBDC is housed in a host’s administrative building that is also used for a variety of purposes, these costs are considered indirect, and therefore must be counted as in-kind match or collectively as part of a waived indirect cost recovery.
Cash sources available to a center to spend according to their developed budget should be identified by name and account. All accounts containing such cash must be under the direct management of the local center director. If a political entity is providing such cash and the funds have been appropriated prior to the issuance of the Notice of Award from SBA, the SBDC must certify that sufficient funds will be available from the political entity prior to use of federal funds.
Cash match cannot include indirect costs of any kind, in-kind contributions, or program income derived from activities supported in whole or in part with federal or match funds. Please thoroughly review the section regarding indirect costs and the OMB Circular.
3. In-Kind Match
In-Kind match is the value of goods and services donated to the program. In-kind may be donated by the recipient or by a third party and is classified in three ways:
Contributions that would otherwise be treated as allowable direct costs if the recipient had to pay for them. These contributions must be allowable costs under the Cooperative Agreement or applicable cost circular.
b. Goods and services
Goods and services that would otherwise be treated as indirect costs by the recipient. These costs are allowable as match only if the recipient establishes a special indirect cost rate for the donations.
c. Other Contributions
Other contributions that result in an increase in the services or property provided under the contract (without additional cost to the SBDC) or a cost savings to the SBDC.
Hence, some costs in any approved budget line item (personnel, travel, consultants, etc.) can conceivably be donated, recorded and reported as in-kind. Some examples of in-kind match are donated printing, supplies or the value of volunteer services.
Standards for valuation of most in-kind donations can be found in the appropriate OMB circular and the Code of Federal Regulations. See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for applicable regulations and requirements. For in-kind contributions not addressed in those documents, the standard for allow ability is “fair and reasonable value.” Rates for volunteer services shall be consistent with those paid for similar work in the host institution. In those instances in which the required skills are not found within the host, rates shall be consistent with those paid for similar work in the labor market in the center’s service area. Please see explanation of valuation of volunteer time within this section, C.2. Special Regulations for Match by Category. SCORE services cannot be used as in-kind match.
4. Overmatched Accounts
The SBA encourages overmatch. However, as long as the total Cash Match provided by the local center is 50% or more of the total contract funds provided during the budget period and the in-kind match equals the remaining total of the contract funds, match requirements have been met. Overmatch may be used in one of the following ways:
· To meet additional matching funds requirements necessitated by any supplemental funding increase received by the SBDC during the budget period;
· May, with the approval of the ASBDC, be used as a credit to offset any confirmed audit disallowance applicable only to the budget period in which the overmatched amount exists; or
· Used to match another federal grant received by the center to extend or improve services, with the approval of the Lead Center.
If used in one of the above situations, the overmatched amount is then reclassified as committed Matching Funds.
C. SPECIAL REGULATIONS FOR MATCH AND IN-KIND CATEGORY
Listed below are several different items that could be claimed as in-kind match. There are specific rules that apply to these categories. They have been drawn from OMB Circulars and the Code of Federal Regulations; however, it is strongly recommended that SBDCs thoroughly study the OMB Circular and chapters of the CFR applicable to their center. See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for relevant OMB Circulars.
1. Donated Space
The value of donated space shall not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.
Volunteer services furnished by professional and technical personnel, consultants and other skilled and unskilled labor may be counted as in-kind match if the service is an integral and necessary part of the SBDC program. These services may not be reimbursed under a federal grant.
Volunteer time must be thoroughly documented and a record of how the valuation of their time was developed must be kept. See Appendix E-1 for a Sample VolunteerTime & Effort Sheet. Documentation of volunteer time must include:
· Name of Volunteer
· Rate per Hours
· Nature of Contribution
· Address of Volunteer
· Date of Time Contribution
· Number of Hours
· Volunteer Signature
· Phone Number of Volunteer
Also, volunteers who counsel must sign the counseling time record or other form with each counseling session. Centers should keep these signed forms in the client files as well as some log of time in the in-kind match files. A summary of volunteer time counted toward in-kind match should be included in each invoice to the Lead Center. Rates for volunteer services should be consistent with those paid for similar work in the host institution. In those instances in which the required skills are not found in the host, rates should be consistent with those paid for similar work in the labor market of the center’s service area. In either case, paid fringe benefits that are reasonable, allowable and allocable may be included in the valuation.
The Colorado SBDC Network has a standard rate of $35.00 per hour for volunteers.
The reasonable value of volunteer time can be determined in one of three ways:
· If the volunteer is providing services that another staff position within the subcenter provides, the volunteer’s time should be valued at the same hourly rate as that staff person. For example, if a volunteer is providing business start-up counseling, such time would be valued at the same hourly rate as the center’s business counselor receives.
· If the volunteer is doing specialized services (i.e. certified public accountant, attorney, etc.) that other staff positions within the center cannot provide, the volunteer’s time may be valued higher than the $35.00 per hour standardized rate. To do this, the subcenter must collect a sampling of local hourly quotes (minimal of 3) for that specialty and take an average of those quotes. The average rate must be approved by the Lead Center before it is counted as in-kind match. In no situation should a counselor’s in-kind time be valued at more than $100 per hour (i.e. If the average rate from the sampling is $150 per hour, the subcenter may value the volunteer’s time at a rate of $100 per hour upon approval of the Lead Center). This is to ensure that the CSBDC’s in-kind contributions are fair and reasonable. This information should be kept attached to the volunteer’s in-kind documentation.
· If an employer donates the services of an employee, these services shall be valued at the employee’s regular rate of pay, not including fringe benefits and indirect costs, as long as the services are in the same skill for which the employer usually pays the employee. If the skills are not the same, then fair market value must be determined as explained above. Back up documentation will need to be provided and pre-approved prior to any donated services.
3. Donated Supplies
These may include such items as expendable equipment, office supplies, laboratory supplies or workshop and classroom supplies. Value assessments of donated supplies included in the match share should be reasonable, and should not exceed the fair market value of the property at the time of donation.
4. Title Transferred Donated Equipment, Land & Buildings
The method used for determining the match value for donated equipment, land or buildings for which the title passes to the recipient may differ according to the purpose of the award. If the purpose is to assist the center in the acquisition of equipment, buildings or land, the total value of the donated property may be claimed as match. If the purpose is to support activities that required the use of equipment, buildings or land, normally only depreciation or use charges for equipment and buildings may be made. However, the full value of equipment or other capital assets and fair rental charges for land may be allowed, provided that the Lead Center and SBA have approved the charges.
5. Donated Property
The value of donated property should be determined in accordance with the usual accounting policies of the recipient with the following qualifications.
The value of donated land and buildings should not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser and certified by a responsible official of the host organization.
· The value of donated equipment should not exceed the fair market value of equipment of the same age and condition at the time of donation.
· The value of donated space should not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately owned building in the same locality.
· The value of loaned equipment should not exceed its fair rental value.
D. RESTRICTED EXPENDITURES AND/OR UNALLOWABLE COSTS
Federal, state matching funds or program income may NOT be used to purchase equipment unless authorized by the State Director. Equipment purchased with federal, cash match and program income funds are the property of the program and may be used and placed at the State Director’s discretion.
Contracts for functions such as equipment, space, consultants and other services may not be awarded to parties debarred or suspended from participation in federally funded assistance programs.
Unallowable costs are as follows. These are expenditures, which cannot be charged against the grant funds, meaning that the center cannot request reimbursement for these costs. These expenditures cannot be used as acceptable match either.
The Lead Center and Sub-centers are responsible for implementing a checks and balances procedure to ensure all expenses charged to the SBDC Program funds are reasonable, allowable, and allocable. For example, all expenses must be reviewed by the Director of the Center (or by the approval authority at the host institution if the expense was incurred by the Director) who will check to ensure the expense is not included in the restricted/unallowable list below.
1. Bad Debts/Contingencies
Any losses, whether actual or estimated, arising from uncollectable accounts and other claims, legal and collection costs, and related costs are unallowable. Contributions to a contingency reserve or any similar provision for unforeseen events are unallowable.
Includes Donations –need to be approved by State Director as Match.
Costs of amusements, social activities and incidental costs relating thereto, such as meals, beverages, lodgings, rentals, transportation and gratuities, are unallowable unless they are part of a meeting or conference. Meetings and conferences, where the primary purpose of which is the dissemination of technical information, are allowable. This includes the costs of meals, transportation, rental or facilities, speakers’ fees, and other items incidental to such meetings or conferences. These must be approved by State Director and Host organization.
4. Donated Services & Property
The value of donated services and property are not allowable either as a direct or indirect cost, except that depreciation or use allowances on dated assets are permitted. The value of donated services and property may be used as match. See match regulations.
Costs resulting from violations of, or failure to comply with federal, state, foreign and/or local laws and regulations are unallowable.
6. Governor’s Expenses
7. Commencement & Convocation Costs
8. Interest & Other Financial Costs
Interest on borrowings (however represented), bond discounts, cost of financing and refinancing operations, and legal and professional fees paid in connection therewith, are unallowable except when authorized by Federal legislation.
9. Legislative Costs
Salaries and other expenses of the State legislature or similar local government bodies, such as county supervisors, city councils, school boards, etc., whether incurred for purposes of legislation or executive direction, are unallowable.
10. Civil Defense Costs
Civil defense costs, including those for first-aid training, fire fighting training, posting of additional exit notices and other approved civil defense measures, when undertaken on the institution’s premises pursuant to suggestions or requirements of civil defense authorities are allowable when distributed to all activities of the institution. Capital expenditures for civil defense purposes will not be allowed, but a use allowance or depreciation may be permitted according to federal regulations. Costs of local civil defense projects not on the institution’s premises are unallowable.
11. Under Recovery of Costs under Grant Agreements
Any excess of cost over the Federal contribution under one grant agreement is unallowable under other grant agreements.
12. Interest, Fundraising & Investment Management Costs
Costs incurred for interest on borrowed capital or temporary use of endowment funds, however represented, are unallowable. Costs of investment counsel and staff and similar expenses incurred solely to enhance income from investments are unallowable. However, costs related to the physical custody and control of moneys and securities are allowable.
13. Lobbying Costs
No portion of the grant, cash match or program income received by an SBDC may be used for lobbying activities, either directly by the SBDC or indirectly through outside organizations except those activities permitted by OMB. Restrictions on and reports of lobbying activities by the SBDC shall be in accordance with OMB Requirements and the annual Program Announcement.
14. Losses on Other Sponsored Agreements or Contracts
Any excess of costs over income under any other sponsored agreement or contract of any nature is unallowable. This includes, but is not limited to; the institutions contributed portion by reason of cost-sharing (requiring match) agreements or any under-recoveries through negotiation of flat amounts for indirect costs.
The cost of establishing and maintaining account and other information systems required for the management of the SBDC program is allowable. This includes costs incurred by central service agencies for these purposes. The costs to maintain central accounting records required for overall State government purposes, such as appropriation and fund accounts by the Treasurer, Comptroller, or similar officials, is considered to be a general expense of government and is not allowable.
16. Legal Expenses
The cost of legal expenses required in the administration of grant programs is allowable. Legal services furnished by the chief legal officer of the State government or his staff solely for the purpose of discharging his general responsibilities as legal officer are unallowable. Costs incurred in connection with the defense of suits brought by an institution’s employees or ex-employees under Section 2 of the Major Fraud Act of 1988, including the cost of all relief necessary to make such employee whole, where the institution was found liable or settled, are unallowable. Costs of legal and related support costs in connection with defense against government claims or appeals or the prosecution of claims against the government are unallowable. Costs of legal and related support services in connection with patent infringement litigation are unallowable.
Costs of insurance required or approved and maintained, pursuant to the SBDC grant, are allowable. Costs of other insurance maintained by the institution in connection with the general conduct of its activities are allowable subject to limitations set forth by federal regulations. Contributions to a reserve for a self-insurance program are allowable, to the extent that the types of coverage, extent of coverage, and the rates and premiums would have been allowed had insurance been purchased to cover the risks. Actual losses, which could have been covered by permissible insurance (whether through purchase or self-insurance), are unallowable. Costs of insurance with respect to any costs incurred to correct defects in the institution’s materials or workmanship are unallowable.
18. Goods or Services for Personal Use
Costs of goods or services for personal use of the institution’s employees are unallowable regardless of whether the cost is reported as taxable income to employees.
19. Housing and Personal Living Expenses
Costs of housing (e.g., depreciation, maintenance, utilities, furnishings, rent, etc.), housing allowance and personal living expenses for/of the institution’s officers are unallowable regardless of whether the cost is reported as taxable income to the employees.
20. Pre-Agreement Costs
Costs incurred prior to the effective date of the sponsored agreement, whether or not they would have been allowable there under if incurred after such date, are unallowable.
21. Special Services & Student Activity Costs
Costs incurred for general public relations activities, alumni activities and similar services are unallowable. Costs incurred for intramural activities, student publications, student clubs and other student activities are unallowable.
Alcohol cannot be purchased by grant, cash match or program income funds. Any such expenses will be denied and must be repaid.
Gifts such as flowers or gift certificates are unallowable. For purchases that are bought due to a common practice in the subcenter workplace may be allowable; approval from the State Director and Host Institution should be sought on these particular items.
24. Cash Awards
Cash awards for events such as business plan competitions are unallowable. This is because cash awards to winners does not directly impact or further the SBDC program. Cash awards may be given out (a) through the host institution and cannot be counted as match, (b) through sponsors that award the cash directly to recipients or (c) through donations that are specifically allocated to cash awards. A letter from the sponsor/benefactor should clearly depict its purpose to provide cash awards for events.
25. Annual Leave
Any annual leave that is accumulated by an SBDC employee before, during, or after employment with the SBDC is not allowed to be charged to any SBDC account when the employee resigns or is terminated. The balance owed to the employee for unused vacation, sick, or other time off is the responsibility of the host institution.
26. Promotional Items and Memorabilia
The costs of promotional items and memorabilia, including models, gifts, and souvenirs are not allowed. 2 CFR 200, §200.421, Advertising and Public Relations, states that this is an Unallowable advertising and public relations cost.
Allowable costs, including directly associated costs, should be segregated and accounted for by the center/host institution separately. In the course of a review, if any cost is deemed unallowable, the center/host institution will be responsible for repaying all such costs either with acceptable, uncommitted, allowable overmatch or with cash. All allowable costs are detailed below.
1. Advertising & Public Relations
Advertising media includes newspapers, magazines, radio and television programs, direct mail, trade papers and the like. The advertising costs allowable are those that are solely for:
· Recruitment of personnel required for grant program
· Solicitation of bids for the procurement of goods and services
· Disposal of scrap or surplus materials acquired in performance of grant
· Other purposes specifically provided for in the grant
Public relations include community relations and activities dedicated to maintaining the image of the center or maintaining or promoting understanding and favorable relations with the community, public at large, or any segment of the public. Please see the OMB circular applicable to your center for further discussion of allowable public relations costs: http://www.whitehouse.gov/omb/circulars/.
2. Audit Services
The cost of audits necessary for the administration and management of functions related to grant programs is allowable.
Costs of premiums on bonds covering employees who handle grantee agency funds are allowable when the government or the organization requires assurance against financial loss to itself or others by reasons of the act or default of the organization. Included are such bonds as bid, performance, payment, advance payment, infringement and fidelity bonds.
Costs incurred for the development, preparation, presentation and execution of budgets are allowable. Costs for services of a central budget office are generally not allowable since these are costs of general government or institution management. However, where employees of the central budget office actively participate in the grantee agency’s budget process, the cost of identifiable services is allowable.
5. Building & Equipment Rental/Lease
The administrative costs for building and equipment lease management that includes review of lease proposals; maintenance of a list of available property for lease, and related activities is allowable. Rental costs of buildings or equipment are allowable to the extent that the decision to rent or lease is beneficial and the costs can be directly identified with the performance of work under the Memorandum of Understanding (MOU). There are other requirements for such rental or lease agreements detailed in the applicable Code of Federal Regulations and the OMB circular applicable to your center. See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for relevant OMB Circulars.
6. Central Stores
The costs of maintaining and operating a central store organization for supplies, equipment and materials used either directly or indirectly for grant programs are allowable.
Communication costs incurred for local and long distance telephone calls or service, teletype service, wide area telephone service (WATS), Centrex, telepack (tie lines), postage, telegrams, messenger service and similar expenses are allowable.
8. Compensation for Personnel Services
Compensation for personnel services covers all amounts, paid currently or accrued, for services rendered during the period of performance under the grant agreement. This includes, but is not necessarily limited to, wages, salaries and supplementary compensation and benefits. This applies to personnel that report directly to the SBDC subcenter director, which must be reflected on the host institution’s organizational chart.
The costs of such compensation are allowable to the extent that total compensation for individual employees:
· Is reasonable for the services rendered;
· Follows an appointment made in accordance with state, local or Indian tribal government laws and rules which meets Federal merit system or other requirements where applicable or conforms to the established policies of the institution, consistently applied; and,
· Is determined and supported as provided in B. Payroll and Distribution of Time, below, so that charges for work performed directly on sponsored agreements and for other work allocable as indirect costs are determined and supported.
Compensation for employees engaged in federally assisted activities would be considered reasonable to the extent that it is consistent with that paid for similar work in other activities of the host. Charges to the SBDC may include reasonable amounts for activities contributing and intimately related to work under the Scope of Services, such as counseling clients, attending meetings and conferences, delivering special lectures about specific aspects of the ongoing SBDC activity, etc.
b. Payroll & Distribution of Time
Amounts charged to grant programs for personnel services, regardless of whether treated as direct or indirect costs, will be based on payrolls documented and provided in accordance with generally accepted practice of the State or a system of monitored workload or a system of personnel activity reports.
Payrolls must be supported by time and attendance or equivalent record for individual employees. Appropriate time distribution records will support salaries and wages of employees chargeable to more than one grant program or other cost objective. The method used should produce an equitable distribution of time and effort. 100% of an employee’s time must be accounted for on the time and effort sheets, not just the SBDC time. Please read the applicable OMB Circular for more details. See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for relevant OMB Circulars.
Compensation for personnel services include, but is not limited to:
· Pension Plan Costs
· Fringe Benefits
· Director and Executive Committee Member Fees
9. Labor Relations
Cost incurred in maintaining satisfactory relations between the institution and its employees, including costs of labor management committees, employee publications and other related activities, are allowable.
10. Plant Security Costs
Necessary expenses incurred to comply with security requirements, including wages, uniforms and equipment of personnel engaged in plant protection, are allowable if they are systematically distributed with other building maintenance costs.
11. Public Information Services
Public information service costs include the costs associated with pamphlets, news releases and other forms of information services. Such costs are normally incurred to:
· Inform or instruct individuals, groups or the general public;
· Individuals/groups in participating in a service program of the organization;
· Disseminate the results of sponsored and non-sponsored activities.
Public information service costs are allowable as direct costs if they are related to the performance of work by the center under the Scope of Services. Such costs are unallowable as indirect costs.
12. Depreciation & Use Allowances
Depreciation and use allowances are means of allocating the cost of fixed assets, such as buildings, capital improvements and equipment, to periods benefiting from asset use. Compensation for the use of fixed assets on hand may be made through depreciation or use allowances, providing the assets are used and needed by the SBDC activities, and properly allocable to the SBDC program. However, a combination of depreciation and use allowances may not be used in connection with a single class of fixed assets. No depreciation or use charge may be allowed on assets that would be considered as fully depreciated. However, a reasonable use allowance may be negotiated for any such assets, after taking into consideration the following:
· The amount of depreciation previously charged to the government;
· The estimated useful life remaining at the time of negotiation;
· The effect of any increased maintenance charges or decreased efficiency due to age; and
· Any other factors pertinent to the utilization of the facility or item for the purpose contemplated.
Depreciation or a use allowance on idle or excess facilities is not allowable, except when specifically authorized by the SBA.
The computation of depreciation or use allowance will be based on acquisition cost. Where actual cost records have been maintained, a reasonable estimate of the original acquisition cost may be used. The value of an asset donated by a third party shall be its fair market value at the time of donation. The computation will exclude the cost or any portion of the cost of:
· The cost of land; and
· Buildings and equipment donated or borne directly or indirectly by the Federal Government through charges to Federal grant programs or otherwise, irrespective of where title was originally vested or where it presently resides.
In lieu of depreciation, a use allowance for buildings and improvements may be computed at an annual rate not exceeding two percent (2%) of acquisition cost. The use allowance for equipment (excluding items properly capitalized as building cost) will be computed at an annual rate not exceeding six and two-thirds percent (6 2/3%) of acquisition cost of usable equipment.
Charges for use allowances or adequate property records must support depreciation. Physical inventories must be taken at least once every two years to ensure that assets exist, are needed, and are in use. Statistical sampling approaches are acceptable. When the depreciation method is followed, however, depreciation records indicating the amount of depreciation taken each period must also be consistently maintained.
The cost of disbursing grant program funds is allowable. Disbursing services cover the processing of checks or warrants, from preparation to redemption, including the necessary records of accountability and reconciliation of such records with related cash accounts.
14. Employee Benefits
Costs identified below are allowable to the extent that total compensation for employees is reasonable as defined in Section VIII Budgets and Accounts, E. 8 Compensation for Personnel Services. Costs associated with insurance where the organization is named as beneficiary are unallowable.
a. Employee Benefits Regarding Leave Compensation
Employee benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, sick leave, court leave, military leave and the like, are allowable if they are:
· Provided under established written leave policies;
· Relative to the amount of time or effort actually devoted by the employee to the SBDC program; and,
· Cost is equitably allocated to all related activities, including Federal grant programs.
b. Employee Benefits Regarding Employer Contributions
Employee benefits in the form of employers’ contribution or expenses for social security, employee health, life, unemployment and workmen’s compensation, insurance, tuition or remission of tuition, severance pay, sabbatical leave, pension plan and the like, are allowable if they are:
· Granted under established written policies; and,
· Relative to the amount of time or effort actually devoted by the employee to the SBDC program; and
· Are distributed equitably to grant programs and to other activities.
Any annual leave that is accumulated by an SBDC employee before, during, or after employment with the SBDC is not allowed to be charged to any SBDC account when the employee resigns or is terminated. The balance owed to the employee for unused vacation, sick, or other time off is the responsibility of the host institution.
Centers/hosts should ensure that they are following all regulations by thoroughly reviewing the applicable OMB Circular.
See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for relevant OMB Circulars.
15. Employee Morale, Health & Welfare
The costs of health or first-aid clinics and/or infirmaries, recreational facilities, employee counseling services, employee information publications and any related expenses incurred in accordance with general state, local or institution policy for the improvement of working conditions, employer-employee relations and employee morale and performance, are allowable based on the approval from the State Director. Income generated from any of these activities will be offset against expenses, unless such funds have been already set aside for employee welfare organizations.
Costs of exhibits relating specifically to the grant programs are allowable.
17. Maintenance & Repairs
Costs incurred for necessary maintenance, repair or upkeep of property, because neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition, are allowable. These costs are only allowable based on approval from the State Director.
18. Materials & Supplies
The cost of materials, supplies and fabricated parts necessary to carry out the grant programs is allowable. Purchases made specifically for the grant program should be charged at their actual prices after deducting all cash discounts, trade discounts, rebates and allowances received by the grantee. Withdrawals from general stores or stockrooms should be charged at cost under any recognized method of pricing consistently applied. Incoming transportation charges are a proper part of material cost.
Direct material cost should include only the materials and supplies actually used for the performance of the SBDC grant and due credit should be given for any excess materials retained by the institution or returned to vendors. Where government donated or furnished material is used in performing the SBDC grant, such material will be used without charge.
19. Memberships, Subscriptions & Professional Activities
The cost of membership in business, technical and professional organizations is allowable, provided:
· The benefit from the membership is related to the grant program;
· The expenditure is for agency membership; and
· The expenditure is not for membership in an organization that devotes a substantial part of its activities to influencing legislation.
b. Reference Material
The cost of books and subscriptions to civic, business, professional and technical periodicals is allowable when related to the grant program.
c. Meetings & Conferences
Costs are allowable when the primary purpose of the meeting is dissemination of technical information relating to the grant program, and they are consistent with regular practices followed for other activities of the grantee. This includes costs of meals, transportation, rental of facilities and other items incidental to such meetings.
The costs of preparing payrolls and maintaining necessary related wage records are allowable as in-kind or part of the indirect in-kind donation. If an outside agency is contracted, this must be prior approved by the lead center for compensation.
Costs for the recruitment, examination, certification, administration, classification, training, establishment of pay standards and related activities for grant program personnel are allowable.
22. Printing & Reproduction
Costs for printing and reproduction services necessary for performance of work in the MOU, including but not limited to, forms, reports, manuals and information literature are allowable. Publication costs of reports or other media relating to grant program accomplishments or results are allowable when provided for in the grant agreement.
23. Procurement of Services
The cost of procurement service, including solicitation of bids, preparation and award of contracts, and all phases of contract administration in providing goods, facilities and service for grant programs is allowable.
In general, taxes or payment in lieu of taxes, which the institution is legally required to pay on behalf of or relating to the SBDC grant and/or the performance of the work in the Scope of Services, are allowable. Any refund of taxes, interest, or penalties and any payment of the institution of interest thereon, attributable to taxes, interest or penalties which were allowed as costs, will be credited or paid as appropriate, to the Government.
25. Training & Education
The cost of in-service training customarily provided for employee development directly or indirectly benefiting grant programs is allowable. Out-of-service training involving extended periods of time is allowable only when specifically authorized by the State Director.
Costs incurred for freight, cartage, express, postage and other transportation costs relating either to goods purchased, delivered, or moved from one location to another are allowable, when such costs can readily be identified with the SBDC grant.
Travel costs are allowable for expenses for transportation, lodging, subsistence and related items incurred by employees who are traveling on official SBDC business. Such costs may be charged on an actual basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of two, provided the method used:
· Is applied to an entire trip and not to selected days of the trip; and
· Results in charges consistent with those normally allowed by the institution’s policies in its regular operation.
The difference in cost between first class air accommodations and less than first class air accommodations is unallowable, except when less than first class air accommodations are not reasonably available to meet necessary mission requirements. Exceptions include those accommodations which:
· Require circuitous routing;
· Require travel during unreasonable hours;
· Result in additional costs which would offset the transportation savings;
· Greatly increase the duration of the flight; or
· Offer accommodations, which are not reasonably adequate for the medical needs of the traveler.
Costs of personnel movements of a special or mass nature are allowable only when authorized or approved in writing by the State Director. Foreign travel must first be pre-approved by the SBA through the State Director.
Unbudgeted out-of-state travel, out of country travel or travel over and above the budgeted amount must also be pre-approved by the SBA through the State Director. Written requests submitted to the State Director for unbudgeted out of state travel should include destination, nature of trip and benefits to be derived. Travel should not be undertaken until approval is received from the Lead Center. Centers may acquire standing approval if their service areas are on state borders requiring some daily probability of out-of-state travel.
Due to detailed information that differs according to entity type, centers should review the OMB Circular applicable to their center for information regarding allowable costs for equipment and other capital expenditures. Equipment purchased with SBDC funds must be labeled as SBDC equipment, and may be subject to Lead Center requests for inventory lists.
See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for relevant OMB Circulars.
F. BUDGET JUSTIFICATION
Well-constructed budgets observe the following principles. Each project and activity is clearly defined. Items of cost in support of a project or activity are clearly defined. The supporting budget narrative clearly explains the composition of each item of cost so that the basis of each cost item is clearly disclosed.
1. Cost Allocation Guidelines
Each cost item must fall into one of the following categories:
Salary of sub-center employees, student salaries and other compensation for services.
b. Fringe Benefits
Employee benefits related to personnel service costs, provided that such benefits are granted in accordance with established host institution policies. Parking costs are unallowable unless in travel status or unless written grantee policy provides such costs for non-SBDC personnel as well.
All travel including airfare, car rentals, mileage, hotel accommodations and per diem costs of SBDC personnel.
d. All Out-of-State and Out-of-Country Travel
All out-of-state and out-of-country travel not specifically listed in the current year budget at the Lead Center must be pre-approved by the State Director and SBA through the State Director. Written requests submitted to the State Director for out-of-state travel plans should explain destination, nature of trip and benefits to be derived (including ASBDC Conference). Travel should not be undertaken until approval is received. Centers may acquire standing approval if their service areas are on state borders requiring some daily probability of out-of-state travel.
Purchase, lease, repair/maintenance and use/depreciation costs for all articles of non-expendable, tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. (Levels are due to CSBDC status as a State government grantee.) Please note that local centers may NOT use state or federal cash to purchase equipment without written approval from the State Director or his/her designee.
Cost of consumable goods used in the operation of the program, such as postage, office and computer supplies and other items under the dollar threshold for equipment.
All SBDC costs if not allocated directly throughout the budgeted line items; all contractual costs other than those for equipment, consultants and space (examples include computing, accounting and audit services).
All consultant-related (non-employees) costs include payment for consultant contracts and travel (primarily used for training, counseling and special projects).
All necessary, justifiable and allowable costs not included elsewhere; miscellaneous and contingency costs are not allowable so all costs in this line item must be described (examples include printing, copying, space, utilities, dues, subscriptions, library resource materials and staff recruitment). All proposed costs require justification and narrative explanation.
See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for relevant OMB Circulars.
2. Budget Justification Form
The budget justification form should show only match you wish to commit to the program, while meeting match requirements. Additional funds should be listed as Restricted Funds if approval is sought from the State Director. See Appendix H-1 for a Sample Standard Form 424 Budget Sheet with the Budget Justification.
3. Supplemental Funds
Occasionally, local centers may be requested to submit proposals to the Lead Center for usage of supplemental funds. These are funds that the SBA has added to the annual grant. Supplemental funds may be added to the base grant, meaning they become a part of the base budget, or they may be a one-time grant only. When requested to submit a proposal, centers should fill out two budget justification forms: one for the project proposed, listing only supplemental funds and match; the other, is a total budget readjustment, showing the center’s entire funding including supplemental and match. Centers will be required to contract for the additional funding (this will involve a contract amendment to the current year’s contract agreement or interagency agreement). Funding must be used in the manner proposed or may be required to be refunded to the Lead Center. Most often the Lead Center will distribute a timeline for funding process, application format and guidelines for use of funds.
Host organizations sponsoring SBDCs must establish financial management systems and internal controls which, provide for:
· Effective control over SBDC financial activities; and
· The accountability for all funds, property and other assets ensuring their use solely for authorized purposes.
The Standards for Financial Management Systems are found in OMB Circular Title 2, Subtitle A, Chapter II, Part 200.
Federal and state funds are distributed through the Lead Center to local centers in the amounts stated in the grant agreement for the current year. CSBDC will reimburse SBDCs on a quarterly basis, based on submission of reports detailing actual expenditures and with such supporting documents as may be required by the Lead Center. Reports are to be submitted with a sub-center director’s and host institution representative’s original signature by the 15th day of the first month following the end of the quarter or month. Final reports are to be submitted by January 15th for the previous grant year ending on December 31st. Late reports will not be reimbursed until the following quarter. If corrections are not made within 20 days of the due date, penalties may start to be assessed. See Appendix B-3 for a sample Non-State Contract Agreement for more stringent language on this topic. Please not that while Interagency Agreements are very similar, they are slightly different due to the nature of being a State of Colorado Entity.
Note that matching funds must be reported therefore a report should be submitted for each month or quarter, even if all funds have been drawn.
The Lead Center reserves 35 days from receipt of quarterly reports to provide payment to the subcenters. Requests to expedite payment are possible depending on circumstances. Centers that over-bill without the mistake being caught will be responsible for repayment of funds and will be offset against the next report.
All quarterly reports must include an original general ledger from the host institutions accounting software. An electronic version of the general ledger may be modified to reflect SBA expense category “ticking” or labeling but the original is still needed to ensure no other modifications were made.
If large expense transfers are present on the general ledger full documentation must be submitted with the quarterly report. This includes a detail of all transactions that comprise the transfer, to and from accounts, and any other backup documentation or description of why a transfer was made.
1. Program Income
The definition of program income is “money collected by the SBDC.” This may include, but is not limited to, income derived from fees for workshops, services beyond the normal scope of SBDC services, or for books, workbooks, etc. Only sponsorships related to a training event or workshop may be accounted for in Program Income. Any other sponsorship, donation, or grant must be accounted for in Cash Match or Restricted Funds. OMB Circular Title 2, Subtitle A, Chapter II, Part 200 requires the Lead Center to completely account for program income related to the SBDC program.
Program income earned during the contract period will be retained by the lead center as long as the CSBDC program is funded by SBA. However, the lead center and/or host institutions have no obligation to SBA with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, and trademarks produced under the SBDC grants. The host will also have no obligation to the lead center regarding program income earned after the end of the SBDC project period as long as the contract will no longer be continued. Income generated from the sale of property must be handled in accordance with the requirements of the Property standards.
a. Program Income Accounts
All program income must be kept in a separate account. This account must have the name of the center and the words “Program Income Account” on all materials, including disbursement checks.
b. Program Income Report
All expenditures and sources of program income must be itemized in a quarterly report to be reviewed by the CSBDC Associate State Director. This report will be submitted to the Lead Center by the 15th day of the month following the end of the quarter.
c. Allowable Expenditures
Program income must be spent to enhance the CSBDC program. Examples of appropriate expenditures include equipment or additional workshops, not included in the projected budget or scope of work. Program income may be used to finance program activities. Program income cannot be used as match.
Research is NOT an allowable use for program income unless it has direct benefit to the statewide SBDC system and/or the local center. Research activities are not to be considered a primary focus of SBDC operations and should be undertaken only when a specific need exists that impacts the small business community. CSBDC sub-center directors are responsible for ensuring that research projects fall within the scope of the CSBDC mission.
Since program income may be carried over indefinitely, it should be accumulated until a worthy expenditure is determined. The program income balance should be kept under 20% of the network and sub-center total budget.
2. Restricted Funds Account
The Restricted Funds account records funds not covered by Cash Match or Program Income. This is mainly sponsorships, donations, and grants that were not included in the original budget or are received during the middle of the year. For example, if a sponsor cannot confirm funds when the budget process is complete, the sponsorship cannot be included as Cash Match for the center. If the funds are later given to the SBDC they should be recorded as Restricted Funds.
Restricted Funds received during the contract period will be retained by the SBDC program as long as the CSBDC program is funded by SBA. The host will also have no obligation to the SBDC regarding Restricted Funds if funds are earned after the end of the SBDC project period as long as the contract will no longer be continued or legally binding.
Since Restricted Funds may be carried over indefinitely, it should be accumulated and used only when appropriate to achieve center goals and further the program. There is no limit to the amount of Restricted Funds that can be accumulated. A separate account is recommended but not necessary for the funds. Separate tracking is required and must clearly document any transactions related to Restricted Funds. Restricted Funds can be used for Cash Match if needed. This is important to recognize and allows sub-centers to stretch funding eligible for match over multiple years.
Sub-centers are required to submit quarterly Restricted Funds reports on or before the 15th of the first month after the end of each quarter. The reporting should capture all income and expenses related to the account and must be backed up by a ticked general ledger. The beginning balance must match the previous year ending balance as funds are allowed to roll between program years.
All expenses and income must be ticked on the general ledger to correspond with the reporting categories listed on the Restricted Funds report. Normal ticks should be used for SBDC approved expenditures. If an expenditure is approved by the State Director but does not follow SBDC guidelines it should be ticked with a special note. For example if a staff appreciation lunch is approved it could be ticked O-NM. The O is for the Other expense category and NM stands for Non Match.
All sponsorships, donations, grants, or other income should be recorded in the income section of the quarterly report. Income generated from trainings or workshops should not be recorded in Restricted Funds, this type of income should only be recorded in Program Income.
Expenses must follow SBA and SBDC guidelines for allowable expenditures. Some expenses will be allowed outside of these guidelines but must be approved by the state Director before they are incurred. For example, SBDC promotional items are not allowed under the SBA Grant guidelines but may be approved by the State Director to be purchased from the Restricted Funds Account. Expenses must always follow host policies even if they do not follow SBA Grant policies.
d. Over Match
When funds are spent from the Restricted Funds account they automatically become Over Match if they meet the SBDC and SBA guidelines. This allows the network to count the expenses as part of the SBA grant and shows that our network is overmatching the required amount. Over Match will not always be reported to SBA but does help our network in the event supplemental funding becomes available that requires additional match. If the expenses do not meet SBDC guidelines they will not be counted as Over Match and this is the reason a special tick and approval is required to identify them on the general ledger.
3. Leading Edge Grant Account
The Leading Edge Grant Account has only one source of revenue: the $3,000 grant received from the State of Colorado (OEDIT). Because these Leading Edge Grant funds are counted as Lead Center Cash Match, this cannot be counted as Program Income for the subcenters in the CSBDC Network. Because of this, these funds must be tracked separately.
a. Leading Edge Grant Accounts
All Leading Edge Grant Accounts must be kept in a separate account. This account must have the name of the center and the words “Leading Edge Grant” on all materials, including disbursement checks.
b. Leading Edge Training and Sponsorship Income
Income generated from workshop fees and sponsorships of the program should be recorded on the Program Income report under Income Source: Leading Edge Training & Sponsorships Revenue (LESR). These are not recorded on the Leading Edge Template.
c. Leading Edge Grant Expenditure Report
All expenditures and sources of the Leading Edge Grant Expenditure must be itemized in a quarterly report to be reviewed by the CSBDC Associate State Director. This report will be included with the quarterly reimbursement request, which must be submitted to the Lead Center by the 15th day of the month following the end of the quarter. Only expenditures up to the $3,000 grant should be recorded on the Leading Edge expenditure report. Any additional expenses should be recorded in the Program Income expense section under Leading Edge Sponsorship Expenses (LESE).
d. Allowable Expenditures
The Leading Edge Grant Account does not need to be spent solely on Leading Edge Program expenses, but instead must be spent to enhance the CSBDC program through training or entrepreneurial activities. Examples of appropriate expenditures include equipment or additional workshops, marketing materials, books or supplies. Leading Edge Grant money cannot be counted at cash match.
H. PROPERTY STANDARDS
The Lead Center and local centers are required to observe standards governing management and disposition of property furnished by the federal government through costs charged to the SBDC grant. This also includes purchases of equipment with match funds. The center may use its own property management standards and procedures, provided the following requirements are adhered to:
1. Equipment Title
No equipment may be purchased with federal funds without prior written approval by the State Director. In addition, all equipment purchased with state or local matching funds is the property of the SBDC program and may be used and placed at the State Director’s discretion.
2. Insurance Coverage
Centers should, at a minimum, provide the equivalent insurance coverage for real property and equipment acquired with the SBDC contract award that is provided to property owned without restriction by the center/host institution.
3. Real Property
Title to real property shall vest in the recipient, OEDIT, if purchased with federal or state funds. Once that property is deemed no longer needed for the purpose of the SBDC program, OEDIT may retain the title while compensating SBA, sell the property under direction of SBA with the proceeds returning to the federal government, or transfer the title to the federal government or eligible third party, with OEDIT being entitled to compensation.
Equipment must be used by the host institution/state in the SBDC program for which it was acquired as long as there is a need, whether or not the program continues to be supported by federal funds. Host institutions/SBDCs shall not encumber the property without approval of the State Director.
Equipment can be made available for use on other projects or programs if such other use will not interfere with the work on the project or program for which the equipment was acquired. The first priority for such other use shall be given to activities sponsored by SBA, and second to activities sponsored by other federal awarding agencies. Use on other activities not sponsored by the federal government shall be permissible if authorized by the Lead Center or SBA. User charges should be treated as program income.
5. Replacement Equipment
When acquiring replacement equipment, the host institution/state may use the equipment to be replaced as trade-in, or sell the equipment and use the proceeds to offset the costs of replacement equipment. This needs to documented and kept on the inventory list that is updated annually. Host institutions and the state will abide by regulations governing the replacement and/or disposition of equipment.
See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for relevant OMB Circulars.
Title to supplies and other expendable property shall vest in the local center/host upon acquisition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate value upon termination or completion of the project or program and the supplies are not needed for any other federally sponsored program, the local center may retain the supplies, use them for other activities or sell them, but shall in either case, compensate the state or the federal government for the proceeds. The amount of compensation should be computed in the same manner as for equipment.
Supplies acquired with federal or state funds shall not be used to provide services to non-federal outside organizations for a fee that is less than private sector charge for equivalent services.
7. Tangible Property
The local host institution may copyright any work that is subject to copyright and was developed, or for which ownership was purchased, under a grant award. Centers and their hosts are subject to applicable regulations governing patents.
SBA reserves a royalty-free, nonexclusive and irrevocable right to:
· Obtain, reproduce, publish or otherwise use the date first produced under a grant award; or
· Authorize others to receive, reproduce, publish or otherwise use such data for their purposes.
Title to intangible property acquired under the SBDC award vests upon acquisition in the center/host. The center/host shall use that property for its originally authorized purpose, and the center/host shall not encumber the property without approval of the Lead Center and SBA.
8. Property Trust Relationship
Real property, equipment and intangible property acquired or improved with federal funds shall be held in trust by the recipient as trustee for the beneficiaries of the SBDC program. SBA may require organizations to record liens or other appropriate notice of record to indicate that personal or real property has been acquired or improved with federal funds and that use and disposition conditions apply to the property.
I. PROCUREMENT STANDARDS
To ensure that materials and services are obtained in compliance with the provisions of applicable federal and state statutes and executive orders, these standards are set forth for use by recipients and sub-recipients of federal funds or the procurement of supplies and other expendable property.
The standards contained in this section do not relieve the center/host institution of the responsibilities arising under its contract(s). The center/host institution is responsible, in accordance with good administrative practice and sound business judgment; for the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in support of the SBDC award or other agreement. This includes disputes, claims, protests, source evaluation and other contractual matters.
The center/host shall maintain written standards of conduct governing the performance of its employees engaged in the award and administration of contracts. No employee, officer or agent shall participate in the selection, award or administration of a contract supported by federal or state funds, if a real or perceived conflict of interest would be involved. Such a conflict would arise when:
· The employee, officer or agent,
· Any member of his immediate family,
· His or her partner, or
· An organization, which employs, or is about to employ any of the above, has a financial or other interest in the firm selected for award.
All procurement transactions should be conducted in a manner to provide, to the maximum extent practical, open and free competition. The center/host shall be alert to organizational conflicts of interest, as well as noncompetitive practices among contractors that may restrict or eliminate competition or restrain trade in any way.
In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, and invitations for bids and/or requests for proposals shall be excluded from competing for that contract. Awards shall be made to the bidder whose bid or offer is responsive to the solicitation and is most advantageous to the center/host, price, quality and other factors considered. Solicitations shall clearly set forth all requirements that the bidder or offertory shall fulfill in order for the bid or offer to be evaluated by the center/host. Any and all bids or offers may be rejected when it is in the center/host’s interest to do so.
All centers/hosts shall establish written procurement procedures. These procedures shall provide for at a minimum:
· Avoidance of purchasing unnecessary items.
· Where appropriate, an analysis made of lease and purchase alternatives to determine which would be the most economical and practical procurement.
· Solicitations for goods and services provided for all of the following:
A clear and accurate description of the technical requirements for the material, product or service to be procured. In competitive procurements, such a description shall not contain features that unduly restrict competition;
Requirements which the bidder/offertory must fulfill and all other factors to be used in evaluating bids or proposals;
A description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards;
The specific features of “brand name or equal” descriptions that bidders are required to meet when such items are included in the solicitation;
Preference to the extent practicable and economically feasible for products and services that conserve natural resources and protect the environment and are energy efficient.
Positive efforts shall be made by center/hosts to utilize small businesses, minority-owned firms and women’s business enterprises; whenever possible. Contracts shall be made only with responsible contractors who possess the potential ability to perform successfully under the terms and conditions of the proposed procurement. Considerations shall be given to such matter as contractor integrity, record of past performance, financial and technical resources or accessibility to other necessary resources. In certain circumstances, contracts with certain parties are debarred and SBA suspends those entities from acquiring contracts.
The CSBDC program falls under OMB Circular A-128, Audits of State and Local Governments. All local centers must adhere to these regulations which require:
· Audits shall be conducted annually for each program year a local center received federal funds. The audit may be a part of a total audit of a host institution. The local center should be audited in accordance with OMB Circular Title 2, Subtitle A, Chapter II, Part 200.
· Organizations compelled (versus merely authorized) by state law to have an audit less frequent than annually, qualify for a biennial audit exception. Otherwise, the organization must be audited annually.
· An “independent auditor” must perform the audit. This is a state or local government auditor or a public accountant who meets the independence standards. Small audit firms and/or audit firms owned and controlled by socially and economically disadvantaged individuals should be used to the fullest possible extent. The audit shall be made in accordance with generally accepted government auditing standards covering financial and compliance audits.
See OMB Circular Title 2, Subtitle A, Chapter II, Part 200 for relevant OMB Circulars.
The auditor shall determine whether:
· The financial statements of the department fairly present its financial position and the results of its financial operations in accordance with generally accepted accounting principals.
· The organization has internal accounting and other control systems to provide reasonable assurance that it is managing federal funds in compliance with applicable laws.
· That the organization has complied with laws and regulations that may have material effect on its financial statements and on each major federally funded program.
· The organization has complied with laws and regulations that may have an effect on each major federally funded program.
· Internal control systems used in administering federally funded programs are functioning in accordance with prescribed procedures.
The auditor will examine Lead Center systems for monitoring local centers/sub-recipients, obtaining and acting on sub-recipient audit reports.
With regard to sub-recipients, the Lead Center is required to determine whether the sub-recipients have met the audit requirements in OMB Circular Title 2, Subtitle A, Chapter II, Part 200.
The Lead Center must also determine whether the sub-recipient spent federal funds provided in accordance with applicable laws and regulations. To accomplish this, the Lead Center will review an audit of the sub-recipient or their host institution made in accordance with OMB Circular Title 2, Subtitle A, Chapter II, Part 200. A financial and program review will be conducted annually. During the reviews, the Lead Center will expect a breakdown of time allotment, duties, and justification of time management. The leadership report must be completed prior to the Lead Centers program review.
If the auditor of a local center/sub-recipient becomes aware of illegal acts or other irregularities, prompt notice should be given to the Lead Center and/or management officials above the level of involvement. Illegal acts or other irregularities shall in turn be communicated to SBA. These acts include such matters as conflicts of interest, falsification of records or reports, and misappropriations of funds or other assets. The state must ensure that appropriate corrective action is taken within six months after receipt of the audit report in instances of noncompliance.
Local centers must submit two copies of their audit report to the Lead Center within thirty days of completion, but no later than one year after the end of the audit period. It is understood that for some state community colleges serving as host institution, the SBDC may not be a part of the audit sampling of federal programs for the current year. However, the SBDC program must be audited in the three-year cycle. The institution’s audit of its entire operation must still be submitted to the Lead Center for review whether direct reference to the SBDC is made or not. If the audit results are part of the statewide audit process, the sub-center shall advise the Lead Center that this is the case. If there are adverse findings the local center and/or the host institution may be requested to submit a response in writing to the Lead Center.
Audit work papers and reports shall be retained for a minimum of three years from the date of the audit, unless SBA notifies the organization in writing to extend the retention period.
The costs of audits made in accordance with the provisions of OMB Circular Title 2, Subtitle A, Chapter II, Part 200 are allowable charges to the SBDC grant. The charges may be considered a direct cost or an allocated indirect cost. The percentage of costs charged to the SBDC program for a single audit of an entire host institution shall not exceed the percentage derived by dividing federal funds expended by total funds expended by the host institution during the fiscal year. The percentage may be exceeded only if appropriate documentation demonstrates higher actual cost.
K. RECORD KEEPING
All centers must keep an accurate accounting of all funds – federal, state and local organization contributions. Centers must have their accounts audited for every year. Please see this Section Audit for more information. Centers may be required to provide accounts for review by the Lead Center or the district SBA office. All records must be kept for a minimum of three complete calendar years.
1. Financial Management Systems
Local center financial management systems should provide for the following:
· Accurate, current and complete disclosure of the financial results of the SBDC programs.
· Records that adequately identify the source and application of funds for SBDC activities. These records shall contain information pertaining to CSBDC awarded funds, authorizations, obligations, unobligated balances, assets, outlays, income and interest.
· Effective control over and accountability for all funds, property and other assets. Recipients should adequately safeguard all such assets and assure they are used solely for SBDC purposes.
· Comparison of outlays with budget amounts for each contract amount. Whenever appropriate, financial information should be related to performance and unit cost data.
· Accounting records including cost accounting records supported by source documentation.
· Written procedures for determining the reasonableness and allowability of costs in accordance with the provisions of the applicable federal cost principles (detailed under Severely Restricted Expenditures and/or Unallowable Costs and Allowable Costs) and the terms and conditions of the MOU.
The following requirements pertain to the center(s) supporting records for in-kind contributions from third parties:
· Volunteer services shall be documented and, to extent feasible, supported by the same methods used by the center for its own employees. A time card or time and effort sheet must be completed and submitted with quarterly reimbursement.
· The basis for determining the valuation for personal service, material, equipment, buildings and land shall be documented.
3. Equipment Records
For all equipment acquired with federal funds, records should be maintained accurately and include the following information:
· A description of the equipment;
· Manufacturer’s serial number, model number, federal stock number, national stock number or other identification number;
· Source of the equipment, including the award number;
· Whether the title vests in the center, OEDIT or federal government;
· Acquisition date (or date received, if the equipment was furnished by the federal government) and cost;
· Information from which one can calculate the percentage of federal or state participation in the cost of the equipment;
· Location and condition of the equipment and the date the information was reported;
· Unit acquisition cost;
· Ultimate disposition data.
A physical inventory of equipment will be taken and the results reconciled with the equipment records at least once every year. Any differences between quantities determined by the physical inspection and those shown in the accounting records shall be investigated to determine the causes of the difference. Centers should, in connection with the inventory, verify the existence, current utilization and continued need for the equipment. The equipment list must be updated prior to every financial review by the Lead Center.
Adequate maintenance procedures should be implemented to keep the equipment good condition. Centers should execute a control system to insure adequate safeguards in to prevent loss, damage, or theft of the equipment. Any loss, damage or theft of equipment must be investigated and fully documented.
4. Procurement Records
Procurement records and files for purchases in excess of $1,000 shall include the following at a minimum: basis for contractor selection, justification or lack of competition when competitive bids or offers are not obtained, and basis for award cost or price. Centers should obtain a minimum of three bids on a product or service when the contract is in excess of $1,000.
Some form of cost or price analysis should be made and documented in the procurement files in connection with every procurement action. Price analysis may be accomplished in various ways – including the comparison of price quotations submitted market prices and similar indicators, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness and allowability. SBA reserves the right to request all procurement documentation if the procurement does not meet certain standards. Contracts for over $5,000 must be pre-approved for solicitation by the Lead Center.
A system for contract administration should be maintained to ensure contractor conformance with the terms, conditions and specification of the contract and to ensure adequate and timely follow-up of all purchases. Recipients shall evaluate that contractors have met the terms, conditions and specifications of the contract.
All contracts should include, in addition to provisions to define a sound and complete agreement, the following provisions. The following provisions also apply to subcontracts:
· All contracts in excess of $5,000 should contain contractual provisions or conditions that allow for administrative, contractual or legal remedies in instances in which a contractor violates or breaches the contract terms and provide for such remedial actions as may be necessary.
· All contracts in excess of $5,000 shall contain suitable provisions for termination by the center/host, including the manner by which termination shall be executed and basis for settlement. In addition, such contracts should describe conditions under which the contract may be terminated for default, as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.
· For all contracts over $50,000 contact the Lead Center for regulations applying to provisions.
· All negotiated contracts (except for those less than $5,000) awarded by the center/host shall include a provision to the effect that the center/host, the State of Colorado, the SBA, the Comptroller General of the United States, or any of their duly authorized representatives, shall have access to any books, documents, papers and records of the contractor which are directly pertinent to a specific program for the purpose of making audits, examinations, excerpts and transcriptions.
· All contracts, including small purchases, awarded by center/hosts shall include OMB Circular Title 2, Subtitle A, Chapter II, Part 200, including the Equipment Employment Opportunity, Copeland “Anti-Kickback” Act, Davis-Bacon Act, Contract Work Hours and Safety Standards Act, the Clean Air Act, the Byrd Anti-Lobbying Amendment and others.
All contracts in excess of $5,000 should contain contractual provisions or conditions to confirm that contractors are not debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities.