Grants Management External Funds (Grant) Acquisition, Management and Compliance
VI, Section 7a, of the City Charter of the City of
2.1 To establish a City-wide policy governing grant acquisition, management and compliance procedures to ensure consistent use by City departments.
3.2 To encourage departments to responsibly pursue external funding that can be reasonably managed while serving the needs of the City.
3.3 To ensure grant audits are being conducted in an appropriate manner.
3.4 To ensure that grant processes are followed.
3.5 To coordinate, where possible, with grant acquisition among City departments.
4.1 To strategically maximize grant revenue to the City, enhance the efficiency of grants processes, improve financial monitoring and reporting associated with grant-funded programs and ensure that all deliverables and performance obligations required by Grantors are satisfied per grant obligations.
5.1 All City departments and divisions are required to adhere to this procedure.
Administration 每 Primarily the responsibility of City departments; includes the collective grant activities from proposal inception to project completion of a sponsored program.
Application 每 A written initial, modification, or renewal request for funds, goods, or services submitted by the City to federal, state, nonprofit, private, or local entities, which clearly describes city obligations in return for the grant funds. If security concerns prevent public disclosure of such information, the orindance must identify the document(s) that establishes such obligations and the location in which it is maintained.
Award 每 An approved application for funds, goods, services, or other assistance subject to terms agreed upon in an executed grant agreement, cooperative agreement, or other legally binding contract.
Capital Project Section 每Business units within the Department of Public Works and Engineering (PWE) Resource Management Division and the Houston Airport Systems Finance Division.
Catalog of Federal Domestic Assistance (CFDA) 每 A listing of all federal assistance programs by agency and number.
Closing 每 A process initiated by a recipient prior to the end of the grant validity period.
Closeout 每 The formal conclusion of all spending, reporting and any changes or exceptions. A requirement of most sponsors, this process documents that all program activities are complete according to the terms of the award and any applicable federal, state or local regulations.
Code of Federal Regulations (CFR) 每 A codification of the rules governing federal assistance programs published in the Federal Register.
Cognizant Agency 每 The single federal agency, designated by the OMB, with whom state and local governments negotiate central service plans, indirect cost proposals and resolve audit findings that affect more than one federal funding source.
Contract 每 An agreement for procurement of funds, goods, services or other assistance with specific obligations according to the terms of an award and applicable federal, state and local regulations.
Cost Allocation Plan 每 Determines the cost of indirect services provided by central service departments (e.g., Finance Department, Controller＊s Office, Administrative and Regulatory Affairs Department) and what administration costs each program should bear according to the indirect cost rate. This rate is set by the cognizant agency or the terms of the grant agreement.
External Funds 每 Any federal, state, nonprofit, private, or local agency monies external to City government, usually in the form of a grant.
Fiscal Year (FY) 每 For City purposes, the period from July 1 through June 30. For the State of Texas, the period from September 1 through August 31. For the federal government, the period from October 1 through September 30. Other fiscal years as may be prescribed by granting agencies.
Grant 每 An award to carry out a valid purpose under terms established by the grantor depending on the type of award and applicable federal, state and local regulations.
Grantee 每 A City Department or organization receiving financial assistance directly from an awarding agency to carry out a project or program. Also referred to as recipient or subrecipient.
Grantor 每 Entity providing financial assistance in the form of an award. Also referred to as the sponsor or awarding agency.
Grants Management Section (Grants Management) 每 A section within the Finance Department (Finance).
Indirect Cost (IDC) 每 Expenses necessary for the general operation of the organization and project activities but are not readily identified with a particular grant, contract, project, or activity. Also referred to as overhead or facilities and administrative costs.
Grant Status 每 Pre-award stages are: research, proposal, and application; and post-award stages are: award, closing, and closed. Applications that are not awarded are cancelled. Also known as the lifecycle status.
Management 每 Primarily the responsibility of Grants Management; includes general oversight of grants resulting in the policies, procedures and operations supporting the receipt, award and monitoring of grants.
Match 每 A contribution based on overall costs of a project or activity provided by the grantee or by third parties from sources other than the grant funds. Can be a ※cash match§ of money or ※in-kind match§ of personnel, supplies, services, equipment or other property.
Office of Management & Budget (OMB) 每 An Executive Office of the President of the United States responsible for issuing circulars to establish uniform standards for administrative and financial regulations for government granting agencies.
Pre-award spending 每 Authorization from the awarding agency to allow for certain expenditures of funds prior to the start of the grant validity period for a specific purpose as stated in the grant agreement. Pre-award spending must be approved by the Grants Management as per business processes.
Post-award 每 The active grant validity period whereby grant activities and expenditures can proceed according to the conditions of the grant agreement, the OMB Circulars, federal and state law and local policies and procedures.
Single Audit 每 A financial, internal control and compliance audit established in OMB circular A-133 for entities that collectively expend $500,000 or more in a year in state, federal and Uniform Grant Management and Standards (UGMS) awards.
Subaward 每 A formula or competitive allocation by an award recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient for funds, goods, services, or other assistance subject to award terms. Also called a subgrant.
Subrecipient 每 An agency, organization, or individual that receives a subaward as a contract from the primary grantee for the purposes of helping the primary grantee in carrying out its mission or program. Generally, recipients are responsible for monitoring compliance of subrecipients with terms of the award, and applicable federal, state and local regulations.
Uniform Grant Management Standards (UGMS) 每 Under authority of Chapter 783 of the Texas Government Code, UGMS outlines the standards for State of Texas grant programs, including cost principles, administrative requirements and the Texas Single Audit circular. UGMS is similar to the federal OMB Circulars.
Validity Period 每 The lifespan of a grant. At the conclusion of the validity period, the grant must be either closed, extended or renewed. Also known as the program period. (Question: Is this the lifespan of a particular grant that has been awarded to the city or is it the multiyear cycle during which the grant program is funded by the granting agency?)
Vendor 每 A supplier of goods or services that are commonly available to both government and non-government entities that is not subject to the same federal, state and/or local regulations as an award recipient or subrecipient.
7.1 Grants Management
7.1.1 Updates City grants-related policies and procedures to comply with grant requirements under the CFR, UGMS, regulations issued by the Grantor Agency and/or state agencies and update grantees of any regulatory changes.
7.1.2 Establishes policies and business processes for administering all grants.
7.1.3 Posts approved grant budgets and inputs the indirect cost rate into the City database.
the Schedule of Expenditures of Federal and State Awards (SEFA), the list of
subaward amounts, the data collection form for Reporting in Audits of States,
Local Government and nonprofits (SF-SAC) for the federal audit
clearinghouse and the reconciliation to the Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30.
7.1.5 Provides technical and management assistance to City departments in the operation of their state and federal grant programs to ensure compliance with all applicable OMB Circulars along with other federal and state certifications and assurances.
7.1.6 Coordinates the City-wide Single Audit, in accordance with OMB Circular A-133.
7.1.7 Formally places grants in a closed status upon receipt of the certification from the City Controller＊s Office.
7.1.8 As part of grant coordination, receives an intent to apply for grant funds document from all departments planning to apply for grant funds, Attachment D.
7.1.9 Receives all grant applications (new and continuation) for inclusion in the financial system to be used for tracking and monitoring purposes. Departments must submit a request for grant setup documents upon receipt of a grant award from a grantor agency.
7.1.10 Provides technical assistance to the departments through the grants research, application and grant program periods.
7.1.11 Enforces the programmatic and policy priorities of the Mayor＊s Office.
7.2 City Council
7.2.1 Authorizes grant applications with an annual value over $400,000.
7.2.2 Approves the acceptance of all grants with matching requirements.
7.2.3 Approves all subsequent procurement, contractual and administrative actions or delegates such approval authority to the appropriate department director, as required by the grant agreement.
7.3.1 Certifies availability of matching funds, final financial grant closeout report, and issues the Single Audit Report in tandem with the Comprehensive Annual Financial Report (CAFR).
7.4.1 Submits indirect cost rates determined by the annual cost allocation plan for central service departments to the cognizant agency for approval.
7.5.1 Obtain department director＊s approval to apply for grants, identifies and satisfies any matching requirements, prepares and submits grant applications with required documentation by the deadline.
7.5.2 Determine whether City Council approval is needed to apply for and accept grant funds, and prepare a Request for Council Action (RCA). For guidance on submitting an RCA for Council approval, refer to Administrative Procedure 2-1. Under Ordinance #97-776, any grant with matching requirements or with an annual value over $400,000 requires City Council approval.
7.5.3 Submits a copy of the application, supporting documentation and a copy of the RCA to the Legal Department for preparation of ordinance for Council.
7.5.4 Submit a copy of the application and supporting documents, including the RCA, to Grants Management at the time of application submission to the Grantor for the grant to be created in the grants module in application status.
7.5.5 Monitor the grant program activities, including activities of subrecipients, for compliance with the grant agreement and any applicable state, federal and local requirements. Attachment B serves as a guideline and checklist for subrecipient monitoring.
7.5.6 Collect and review audit reports of subrecipients, issue management decisions on audit findings, and ensure the subrecipient takes any necessary corrective action.
7.5.7 Retain all records relating to the grant program for a minimum of five years after (1) the date the final financial report is submitted; or (2) the last request for grant records during an audit, whichever is most recent, unless otherwise noted by the grantor or in OMB Circular A-102.
7.5.8. Provide all necessary documents and proactively communicate potential audit findings to Grants Management for review and technical support during the Single Audit Review.
7.6.1 While keeping with all aspects of this policy, HCDD is primarily responsible for administering HUD-related programs for the City.
7.6.2 All City departments spending HUD funds or grant funds originating or passing through HCDD, will adhere to and comply with the same requirements as though such City department was the primary administrator. This includes proper timekeeping as required by applicable prevailing wage statutes, specific grant fund allocation, etc.
7.7.1 Upon receipt of grant application and all supporting documentation from the Department, prepares ordinances to accompany Requests for Council Actions.
7.7.2 Reviews grant applications and related contracts prior to Council approval.
7.7.3 Resolves legal questions regarding grants.
7.7.4 Assists, as necessary, with the development or negotiation of the terms and conditions of grant applications and related contracts.
7.8.1 Maintains the City database Project Module records for the related Grant Reimbursable CIP Projects and prepares the necessary CAFR reports.
8. GRANTS MANAGEMENT PROCEDURE
8.1 Grants Management and Pre-Award Process
programs that a department wishes to operate shall be evaluated by the
department to determine its benefit to the City, long and short-term
financial implications, feasibility and compatibility with existing City services and goals. The review may include evaluations of the amount of funds and resources available, regulations, sustainability, assurances, compliance, certifications, eligible activities, reporting and matching requirements.
220.127.116.11 Under Ordinance #97-776 (Attachment C), applying for and receiving grant funds with matching requirements or with an annual value over $400,000 requires City Council approval. City Council shall also take all actions per the solicitation as required by the grant agreement
18.104.22.168 The application and RCA should be sent to the Legal Department for preparation of an ordinance.
22.214.171.124 An RCA must be completed, and the original must be submitted to the office of the Agenda Director and one copy must also be provided to the Legal Department.
126.96.36.199 The Department submits a copy of the application and supporting documents including the RCA to Grants Management at the time of application submission to the Grantor for the grant to be created in the grants module in application status.
188.8.131.52 The RCA should describe the proposed application, including all of the following:
184.108.40.206.2 Need for the project
220.127.116.11.3 Effect on or relationship with other City departments or divisions
18.104.22.168.4 Total cost, match requirement and fund account information
22.214.171.124.5 Long and short-term effect on City budget
126.96.36.199.6 Grant program period
188.8.131.52.7 Status application (new, renewal, modification)
184.108.40.206.8 Plans for continuation, if any, following grant termination
220.127.116.11.9 General benefit to the City
8.1.3 The Legal Department will review all applications and forward one copy with the ordinance and copy of the Request for Council Action form to the City Controller.
8.1.4 The City Controller will certify the availability of funds for any financial obligation of the City in connection with the grant application and forward the original and two copies with the certified ordinance and a copy of the Request for Council Action to the City Secretary for presentation to the Mayor＊s Agenda Director for inclusion on the Council Agenda.
8.1.5 Following Council approval of an application, the City Secretary will forward the original application and any copies to the Mayor for signature, as needed. After the Mayor＊s signature is obtained, applications may be submitted to the Grantor.
8.1.6 It is anticipated that processing the above-described steps will require ten working days following receipt of the applications by the Legal Department and Grants Management; thus, it is incumbent on departments/divisions to submit applications within ample time to meet the Wednesday Agenda Office deadline.
8.1.7 Council may delegate to the director of a department seeking a grant the authority to apply for and accept future funding under a grant program that is offered on a recurring or multi-year basis as specified in the RCA for the project period but not to exceed five years. Council may also delegate the authority to execute any related documents necessary to secure the grant. If Council makes this delegation, it will not be necessary for a department to return to Council for approval to apply for subsequent funding under the same grant program or project period but not to exceed five years. This section does not apply to any grant application or contract that requires City matching funds, as opposed to in-kind contributions. Cash matching funds do not include in-kind contributions such as City staff time, office space or other non-cash items.
Blanket Ordinance No. 97-776, authorizes department directors to apply for and accept grant funding on the City＊s behalf for all grant assistance programs related to that department that are valued at $400,000 or less per year provided that no matching city funds are required. The following requirements apply:
8.2.1 Submit a Notice of Intent to Apply for Grant Funds to Grants Management, Attachment D.
8.2.2 Obtain the department director＊s approval to apply for new and continuation grant funding.
8.2.3 Submit a copy of the grant application and other supporting documentation along with grant set-up documents to Grants Management at the time the application is submitted to the grantor. Grants Management will enter the grant within the grants module to be used for tracking and monitoring purposes.
8.2.4 Monitor the grant program activities, including activities of subrecipients.
8.2.5 Collect and review audit reports of subrecipients, issue management decisions on audit findings, and ensure that subrecipient takes any necessary corrective action.
8.2.6 Reconcile all expenditures under the grant programs, forward copies of final grant reports to Grants Management and the Controller＊s Office.
8.2.7 Once the department has reconciled its final financial reports to the grantor, the department must reconcile the same final financial information in the City＊s financial system no later than 60 days after closing the grant with the grantor.
8.2.8 Retain all records relating to the grant program for a minimum of five years after (1) the date the final financial report is submitted; or (2) the last request for grant records during an audit, whichever is most recent, unless otherwise noted by the grantor or in OMB Circular A-102.
8.2.9 Provide all necessary documents and proactively communicate potential audit findings to Grants Management for review and technical support during the Single Audit Review.
8.3.1 Request for pre-Award spending. Departments may request pre-award spending of their grant application under certain scenarios:
18.104.22.168 The grantor authorizes expenditures of funds prior to the start of the grant validity period for a specific purpose as stated in the grant agreement.
22.214.171.124 A City department has already received from City Council authorization to apply for, accept and expend funds for a grant program where the grant validity period has already begun, but the grant agreement has not been fully executed.
8.3.2 Pre-Award spending will primarily be used for payroll purposes or other requests as may be reviewed and approved by Grants Management.
8.3.3 Pre-Award spending must be approved by Grants Management.
8.4.1 Award notice 每 Upon receipt of the notice of the grant award, the department is responsible for reviewing the grant agreement and forwarding all information to Grants Management. Grants Management shall review Checklist to Move a Grant to Award Status upon approval to change the application status to award. Departments shall enter and pre-post the grant＊s budget.
8.4.2 Grant Budget Modifications 每 Accompanied by supporting documentation and the appropriate approvals, departments will notify Grants Management when modifications to the grant budget are necessary. Grants Management should make the necessary database post and notify the department upon completion.
8.4.3 Closing process 每 When possible, departments shall begin the closing process no later than 30 days before the end of the grant validity period. Departments shall give Grants Management advance warning when they are not able to close grant funded payroll positions before the end of the grant validity period. Further, departments shall:
126.96.36.199 Notify Grants Management to update the grant to closing status.
188.8.131.52. Grants Management will forward the grants closeout checklist.
184.108.40.206 Ensure all outstanding invoices are paid and billings and/or draw downs are submitted to the grantor.
220.127.116.11 Review all records for compliance, eligibility and validity.
8.4.4 Final billing and reporting 每 There should be no new purchase acquisitions or reimbursement requests at the conclusion of the validity period with the exception of entitlement grants and grantee procedures. In accordance with OMB Circular A-102, or the terms of the grant agreement:
18.104.22.168 Equipment shall be disposed of;
22.214.171.124 Excess revenue shall be returned to the grantor agency; and
126.96.36.199 Excess expenditures including personnel shall be removed from the grant fund and moved to another operating fund.
188.8.131.52. Once the department has reconciled its final financial reports to the grantor, the department must reconcile the same final financial information in the City＊s financial system no later than 60 days after closing the grant with the grantor.
The final financial report shall be sent to the City Controller＊s Office for certification.
9. GRANT ACCOUNTABILITY AND AUDITING
9.1 Finance shall ensure that a single audit or other audit of federal and state grant funds is performed in compliance with applicable provisions of the Single Audit Act applicable governmental OMB circulars, and other relevant federal, state and local rules and regulations.
9.2 City departments administering federal and state grants are responsible for ensuring that an annual audit of federal and state grant funds disbursed by subrecipients is conducted each fiscal year in compliance with applicable provisions of the Single Audit Act, applicable governmental OMB circulars, and other relevant federal, state and local rules and regulations.
9.3.1 Finance has primary responsibility for the timely selection of an Independent Certified Public Accounting Firm to perform annual City-wide audits in compliance with City purchasing guidelines.
9.4.1 Finance is responsible for the monitoring and tracking of audit activities. Each department shall submit an Attachment A to the Finance Director no later than thirty days after approval of subrecipient contract with the City.
9.4.2 Subrecipients of the City who receive federal grant awards in the amount of $500,000 and above are required to have an Independent Certified Public Accountant firm perform annual audits of their activities. Such audit must be submitted to the City within 30 days upon completion.
184.108.40.206 Project progress, site visits, and compliance with the contract agreement.
220.127.116.11 Subrecipient funds are used for approved purposes only.
18.104.22.168 Subrecipients are accounted for appropriately by submitting Attachments A & B to Grants Management.
9.5.1 In accordance with OMB Circulars A-133 and annual Compliance Supplements, the single audit is intended to be the basic financial and compliance audit of a federal and state assistance program. The audit report shall include, at a minimum, all of the following elements:
22.214.171.124 The basic financial statements.
126.96.36.199 A schedule of federal assistance showing the total federal expenditure for each financial assistance program.
188.8.131.52 An auditor's opinion on the basic financial statements, with notes, and a supplementary data opinion on the schedule of federal and state financial assistance (SEFA).
184.108.40.206 An auditor's report on the study and evaluation of internal control systems. The auditor's report shall identify the significant internal accounting controls, and those controls designed to provide reasonable assurance that federal programs are being managed in compliance with applicable laws and regulations. The auditor's report shall also identify the controls that were evaluated, the controls that were not evaluated together with the reasons why, and the material weaknesses identified as a result of the evaluation.
220.127.116.11 An auditor's report on compliance containing:
18.104.22.168.1 An opinion as to whether the grant recipient or subrecipient has complied with applicable laws and regulations;
22.214.171.124.2 Noncompliance which would have a material effect on the program;
126.96.36.199.3 A statement of positive assurance with respect to those items tested for compliance, including compliance with laws and regulations pertaining to financial reports and claims for advances and reimbursements;
188.8.131.52.4 Negative assurance on those items not tested;
184.108.40.206.5 A summary of all instances of noncompliance; and
220.127.116.11.6 An identification of total amounts questioned, if any, for each federal assistance award, as a result of noncompliance.
9.5.2 All fraud, abuse, illegal acts or indications of such acts, including all questioned costs found as the result of these acts that are disclosed during the audit, shall be covered in a separate written report.
9.5.3 A corrective action plan (CAP) including comments on the auditor's findings, recommendations, and comments on the status of corrective action on prior year findings shall accompany the single audit report.
9.6.1 The department administering the grant will be responsible for resolving questioned or disallowed audit costs and audit findings identified in City-wide and sub-recipient audits and forwarding a written resolution of audit findings to the Finance Director or designee. The Finance Director or designee will review and approve the department's resolution work and submit the proposed resolution to the grantor agency for approval.
18.104.22.168 After the final audit report is issued, a copy of the audit report will be forwarded by the department administering the grant to the Finance Director or designee and the City Controller. The department shall review audit findings, in consultation with the sub-recipient, and submit a written response to the Finance Director. The department will be allowed up to 45 days to respond to any audit findings.
22.214.171.124 The response to audit findings shall include a corrective action plan which outlines specific action to be taken, or underway to correct any deficiencies identified in the audit report.
126.96.36.199 The department administering the grant will issue an initial determination to subrecipients. Up to 30 days will be allowed for the subrecipient to respond to the audit findings.
188.8.131.52 The department will issue a final determination to the subrecipient within 120 days after receiving the final audit report. Final determination will reference all questioned and disallowed costs, and administrative findings cited in the audit report.
184.108.40.206 The department shall submit the final determination to the Director of Finance for review, approval and submittal to the appropriate federal or state grant agency.
9.7.1 A subrecipient may appeal within 30 days of the final determination to an Appeals Board, composed of the Director of Finance or designee, a representative of the City Legal Department, the Office of the City Controller and the director of the department administering the grant. The Director of Finance will make the final decision to allow or disallow costs in compliance with applicable laws and regulations, to proceed with debt collection, or to adopt other remedies for resolution of questioned and disallowed costs. The time frame for audit resolution will be as follows:
220.127.116.11 Resolution leading to final determination 每 120 days
18.104.22.168 Appeal from final determination 每 30 days
22.214.171.124 Disposition of audit findings 每 150 days
9.8.1 When a final determination disallowing costs has been issued, a debt is established. The department, in consultation with the Director of Finance and the Legal Department, will identify any sanctions or corrective action to impose, and any actions that may be needed to collect a debt.
9.8.2 There are several options available to the City for settlement of debts. These options include installment payments, withholding, offset, adjustments in payments and cash. Although these options are available, in cases where cash is not the method of repayment, the City through the federal or state grantor agency, shall request approval to use a non-cash option for repayment. It should be noted that cash is the required method of repayment where there is an unallowable expenditure due to willful disregard of the requirements of applicable grant rules and regulations, gross negligence or failure to observe accepted standards of administration.
9.8.3 A total of three demands, at not more than 30-day intervals, shall be issued to the subrecipient by the City. Prompt action by the City will be taken to protect the City's interest and to recover any disallowed costs.
9.9.1 The department administering the grant will conduct follow-up to verify that corrective action has been taken by the subrecipient.
10.1 Legal and Compliance References
10.1.1 All City Departments that apply for and administer state and/or federal grants are required to be knowledgeable in and have policies in place to ensure compliance with (in the order in which they are typically followed):
10.1.1.1 Federal statutes, including applicable OMB Circulars and the Code of Federal Regulations (CFR);
10.1.1.2 Federal and state granting agency policies and rules;
10.1.1.3 Grant award terms and conditions as set forth in the grant agreement; and
10.1.1.4 City Charter, ordinances, policies and procedures.
10.2 Website Directory
10.2.1 Grants Management shall host and maintain a web-directory that links to applicable state, federal or other informative websites that can be used to aid in the proper administration of grants. This directory may be found at:
11. CONFLICT AND REPEAL
11.1 This Administrative Procedure supersedes Administrative Procedure 4-1, External Funds (Grant) Application Procedure, signed June 10, 1983, and Administrative Procedure 4-3, Audit Management Plan, signed February 15, 1996, which shall be of no further force or effect.
12.1 Attachment A 每 Subrecipient Tracking Sheet
12.2 Attachment B 每 Subrecipient Monitoring Checklist
12.3 Attachment C 每 Code of Ordinance 97-776
12.4 Attachment D 每 Intent to Apply for Grant Funding