Procedure No. 30.6

Adopted: 4/27/2022

Per 2 CFR § 200.302 (b), the financial management system of each non-Federal entity must provide for the following:

1. Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the CFDA title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any;
2. Accurate, current, and complete disclosure of the financial results of each Federal award or program;
3. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.;
4. Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes;
5. Comparison of expenditures with budget amounts for each Federal award;
6. Written procedures to implement the requirements of cash management; and
7. Written procedures for determining the allowability of costs in accordance with Subpart E - Cost Principles of this part and the terms and conditions of the Federal award.

The following document the procedures for 2 CFR § 200.302 (b)(7) noted above.

In accordance with Atlantic Cape Community College’s Cost Policy Statement, costs must be allowable to be charged to Federal Awards. All expenditures made with federal funds must meet the standards outlined in 2 CFR Subpart E – Cost Principles, including:

• §200.403(a) - Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.
• §200.403(b) - Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.
• §200.403(c) - Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity.
• §200.403(d) - Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.
• §200.403(e) - Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.
• §200.403(f) - Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period.
• §200.403(g) - Be adequately documented.
•  §200.403(h) -Cost must be incurred during the approved budget period.

 Atlantic Cape Community College has established the process outlined below to ensure that costs charged to Federal awards are in accordance with 2 CFR Subpart E:

•  The respective Federal Program Director and the Grants Accountant review the grant budget outlined in the approved grant agreement. Proper general ledger objects codes are determined.
• The Chief Financial Officer (CFO) or the Controller create the general ledger accounts unique to the grant based on the approved grant budget reviewed above.
• The College ‘s general ledger account structure consists of five components which allow for clear separation of restricted and unrestricted funds:
  • The Fund component clearly differentiates between the Fund type and is further defined by the two-digit sub-component with the restricted fund defined as 31 – Direct Federal Awards and 32 – Federal Awards Pass through
  • The Department component is a unique 5 digits defined by grant award, therefore clearly separating expenses and revenue from all other College financial activity
  • Each restricted Department has its own assets, liabilities and fund balance, as applicable.
• Access to create general ledger accounts in the Management Information System (MIS) is limited to the CFO, Controller and the Director, Accounting, Budgets and Foundation Reporting.
• The Grants Accountant enters the budget into the College’s MIS in accordance with the approved grant budget.
• Only Finance department staff have access to enter budgets or journal entries in the MIS.
• The respective Federal Program Director reviews the proposed cost to determine whether it is an allowable use of federal grant funds before obligating and spending those funds on the proposed goods or services.
  • For Payroll:
    • Assignment forms are prepared and approved by the respective Federal Program Director and Cabinet Member, as well as Director , Human Resources.
    • Time and Effort Reports documenting the work applicable to and charged to the Federal Grant are maintained
  • For Purchases:
    • Atlantic Cape utilizes its MIS system for purchase requisitions – See Purchasing Manual and Uniform Guidance Procurement Procedures.
    • The respective Federal Program Director and Cabinet Member, as well as designated Purchasing staff member approve the requisition in the MIS before a purchase Order is issued.
• The following factors must be considered when making an allowability determination:
  • Necessary Costs: Necessary is determined based on the needs/ goals of the program. Specifically, the expenditure must be necessary, or vital, to achieve a program objective. Considerations for whether a cost is necessary include:
    • Whether the cost is needed for the proper and efficient performance of the grant program;
    • Whether the cost is identified in the approved budget or application;
    • Whether there is an educational benefit associated with the cost;
    • Whether the cost aligns with identified needs based on results and findings from a needs    assessment; and
    • Whether the cost addresses program goals and objectives and is based on program data.
  • Reasonable Costs: A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Considerations for whether a cost is reasonable include:
    • Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the College or the proper and efficient performance of the Federal award;

    • The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award;

    • Market prices for comparable goods or services for the geographic area;

    • Individuals concerned must act with prudence in the circumstances considering their responsibilities to the College and roles in administering the Federal award.;

    • To be reasonable, the College may not significantly deviate from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.

  • Allocable Costs: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost:

    • Is incurred specifically for the Federal award;

    • Benefits both the Federal award and other work of the College and can be distributed in  proportions that may be approximated using reasonable methods; and

    • Is necessary to the overall operation of the College and is assignable in part to the Federal award.