Workforce Investment Act Financial Management

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Georgia Department of Labor







Workforce Investment Act
Financial Management
And
American Recovery and
Reinvestment Act of 2009

Technical Assistance
Guide


September 2011



2
Georgia Department of Labor
148 Andrew Young International Blvd, N.E.
Atlanta, Georgia 30303

www.dol.state.ga.us







Department
Suite Number
Phone
Fax


Commissioner’s Office 600 404-232-7300

Financial Services Division
Audits 326 404-232-3602 404-232-3603
Grants & Contracts 472 404-232-3590 404-232-3593
Special Accounting 372 404-232-3600 404-232-3599

Career Development Services 650 404-232-3775 404-232-3771








3
TABLE OF CONTENTS

CHAPTER 1 : INTRODUCTION ..................................................................................................................... 5
 
PURPOSE .......................................................................................................................................................... 6
 
SCOPE ............................................................................................................................................................... 7
 
WORKFORCE INVESTMENT ACT OF 1998 ................................................................................................ 7
 
WHERE TO FIND INFORMATION ON WIA ................................................................................................ 8
 
CHAPTER 2 : FUND DISTRIBUTION/FUNDING PROVISIONS............................................................... 9
 
PERIOD OF AVAILABILITY ....................................................................................................................... 11
 
REQUEST FOR ADDITIONAL FUNDS ....................................................................................................... 15
 
PROGRAM INCOME ..................................................................................................................................... 17
 
STAND-IN COSTS ......................................................................................................................................... 18
 
CHAPTER 3 : FINANCIAL MANAGEMENT SYSTEM ............................................................................ 19
 
INTRODUCTION ........................................................................................................................................... 20
 
FINANCIAL MANAGEMENT SYSTEM STANDARDS ............................................................................. 20
 
FEDERAL/STATE REPORTING DEFINITIONS ......................................................................................... 23
 
ACCRUALS .................................................................................................................................................... 24
 
OBLIGATIONS .............................................................................................................................................. 25
 
ENCUMBRANCES ........................................................................................................................................ 26
 
DRAWDOWNS .............................................................................................................................................. 27
 
FINANCIAL STATUS REPORTS ................................................................................................................. 27
 
1512

ARRA

REPORTS ................................................................................................................................... 28
 
FEDERAL, STATE, AND LOCAL AREA REPORTING ............................................................................. 28
 
TOTAL FEDERAL EXPENDITURES ........................................................................................................... 33
 
CONTRACT DEOBLIGATION PROCESS ................................................................................................... 33
 
OVERSIGHT & MONITORING .................................................................................................................... 34
 
FEDERAL ACCOUNTING REPORTING SYSTEM .................................................................................... 35
 
FIFO/ADJUSTMENT PROCESS AT CENTRAL OFFICE ........................................................................... 36
 
CHAPTER 4 : ALLOWABLE COSTS ........................................................................................................... 37
 
ADMINISTRATIVE COSTS .......................................................................................................................... 38
 
PROGRAM COSTS ........................................................................................................................................ 38
 
SUMMARY OF ALLOWABLE COSTS ....................................................................................................... 39
 
DISALLOWED COSTS .................................................................................................................................. 40
 
CHAPTER 5 : COST ALLOCATION AND COST POOLING ................................................................... 41
 
INTRODUCTION ........................................................................................................................................... 42
 
TYPES OF POOLS ......................................................................................................................................... 42
 
COST POOL MANAGEMENT ...................................................................................................................... 42
 
ALLOCATION BASES .................................................................................................................................. 42
 
PROCEDURE FOR COST POOLS ................................................................................................................ 43
 
CHAPTER 6 : FINANCIAL REPORTING SYSTEMS AND FORMS ....................................................... 44
 
FINANCIAL STATUS REPORTING SYSTEM ............................................................................................ 45
 
DRAWDOWN SYSTEM ................................................................................................................................ 46
 
FINANCIAL

CLOSEOUT .............................................................................................................................. 46
 
CHAPTER 7 : PROCUREMENT & PROPERTY MANAGEMENT .......................................................... 48
 
PROCUREMENT POLICIES & PROCEDURES .......................................................................................... 49
 
PROCUREMENT METHODS ....................................................................................................................... 50
 
PERFORMANCE-BASED CONTRACTS ..................................................................................................... 54
 
REQUIRED CONTRACT CLAUSES ............................................................................................................ 58
 
PROCURING AN AUDIT .............................................................................................................................. 60
 
EQUIPMENT AND RELATED REQUIREMENTS ...................................................................................... 60
 
CHAPTER 8 : FRAUD, WASTE AND ABUSE ............................................................................................. 62
 

4
E
XAMPLES OF
F
RAUD
,

W
ASTE AND
A
BUSE INCLUDE
: ...................................................................................... 63
 
S
IGNALS OF
F
RAUD
,

W
ASTE AND
A
BUSE
......................................................................................................... 64
 
P
REVENTION OF
F
RAUD
,

W
ASTE AND
A
BUSE
................................................................................................... 64
 
R
EPORTING OF
F
RAUD OR
C
ORRUPTION
........................................................................................................... 65
 
CHAPTER 9: AUDITS AND AUDIT RESOLUTION .................................................................................. 66
 
AUDIT REQUIREMENTS ............................................................................................................................. 67
 
VENDOR OR SUB-RECIPIENT RELATIONSHIP ...................................................................................... 69
 
AUDITS .......................................................................................................................................................... 69
 
AUDIT RESPONSIBLITIES (OMB A-133) .................................................................................................. 72
 
FINANCIAL SETTLEMENT/FINAL DETERMINATION .......................................................................... 79
 
CLOSEOUT, SUSPENSION AND TERMINATION .................................................................................... 80
 
ARRA

AUDIT

COVERAGE .......................................................................................................................... 82
 
CHAPTER 10 : APPENDICES ........................................................................................................................ 84
 
APPENDIX A: WIA LOCAL AREA REQUIREMENTS .............................................................................. 85
 
APPENDIX B: INSTRUCTIONS FOR FINANCIAL STATUS REPORTING SYSTEM ........................... 91
 
APPENDIX C: WIA GRANT FUNDING PERIODS .................................................................................... 97
 
APPENDIX D: EXAMPLES OF FARS REPORTS .................................................................................... 101
 
APPENDIX E: SAMPLE ADJUSTMENT AND FIFO WORKSHEETS ................................................... 105
 
APPENDIX F: FINANCIAL REPORTING SYSTEMS FORMS AND INSTRUCTIONS ........................ 110
 
APPENDIX G: WIA ALLOWABLE AND UNALLOWABLE COSTS CHART ...................................... 122
 
APPENDIX H: AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 (ARRA) ................. 136
 
APPENDIX I: OMB CIRCULAR A-133 COMPLIANCE SUPPLEMENT ............................................... 146
 
APPENDIX J: WIA FINANCIAL CLOSEOUT .......................................................................................... 152
 
APPENDIX K: ACRONYMS ...................................................................................................................... 175
 
APPENDIX L: GLOSSARY ........................................................................................................................ 177
 


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CHAPTER 1
: INTRODUCTION



 PURPOSE
 SCOPE
 WORFORCE INVESTMENT ACT OF 1998 (WIA)
 AMERICAN RECOVERY & REINVESTMENT ACT OF 2009 (ARRA)
 WHERE TO FIND INFORMATION ON WIA AND ARRA















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PURPOSE

The purpose of this document is to provide Local Workforce Investment Areas (LWIAs)
with operational guidance and information that will assist in ensuring that the Governor’s
financial responsibilities under the Workforce Investment Act of 1998 (WIA) 20 CFR Part
652 et al., Title I, Part B. Section Chap. 5, Public Law 105-220, 20 U.S.C. 9201 and the
American Recovery and Reinvestment Act (ARRA) of 2009, Title VIII, Public Law 111-5
are fulfilled. In accordance with 29 CFR 97 and OMB guidance, all other program manuals,
handbooks, and other non-regulatory materials, which are inconsistent with this manual, are
superseded, except to the extent they are required by statute.

The Financial Management Technical Assistance Guide (TAG) is issued by the Georgia
Department of Labor and compiles financial management information that is intended to
assist LWIAs in complying with Federal and State requirements and in improving the
operational integrity of local financial management systems. Local areas may also find the
“Georgia Workforce Investment Act Workforce System Guidelines,” issued by the GDOL
Career Development Services, to be a useful resource tool as it addresses both programmatic
and financial issues (www.dol.state.ga.us/wp/wia_system_guidelines.htm
). The format
offers explanations/clarifications of selected rules and regulations and also answers questions
asked by interested parties pertaining to WIA.

The TAG does not replace or supplant the Act or the regulations and the requirements
contained in applicable Office of Management and Budget (OMB) Circulars and the Uniform
Administrative Requirements. It should be noted that in some instances, State guidance may
be more restrictive than the applicable Federal guidance or it establishes new guidance where
none existed. The more restrictive guidance, or established new guidance takes precedence.

The detailed administrative requirements of the OMB Circulars such as A-87, 29 CFR 95,
Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher
Education
, et cetera: Final Rule, the OMB issuance entitled Uniform Administrative
Requirements for Grants and Cooperative Agreements with State and Local Governments
(Common Rule)
issued by the United States Department of Labor (USDOL) as Title 29 CFR
97, and the implementing regulations in Title 41 CFR 29-70 of the Federal Register apply to
all titles under the Act. LWIAs may elect to issue operating guidelines that are more
restrictive so long as they are consistent with State and local laws or other applicable Federal
regulations.

This TAG is intended to assist individuals who are responsible for financial management in
effectively performing their responsibilities. The TAG is provided for State, local and other
grant staff responsible for ensuring that Workforce Investment Act Title I and the American
Recovery and Reinvestment Act of 2009 programs are properly managed and are fiscally
sound. Although financial management staff will be primarily users of this TAG, it is
expected that program administrators and other staff will also use this document. The TAG
is specifically designed to:

 Provide operational guidance under American Recovery and Reinvestment Act of
2009
 Provide operational guidance under WIA Title I
 Provide operational guidance under ARRA Title VIII
 Strengthen fiscal and program accountability

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 Assist LWIAs in completing required reports in compliance with regulatory
mandates
 Provide necessary information for financial analysis and monitoring

SCOPE

This document incorporates State policies and procedures according to the Acts,
administrative standards, cost principles, and applicable State and Federal laws and
regulations. The cost principles as contained in 29 CFR 97.22(b), which lists the types of
organizations (State, Private Non Profit, Educational Institutions, For Profit, etc.) and the
applicable cost principles, apply to recipients and sub-recipients of WIA and ARRA funds.
The conditions prescribed in Sections 181, 194, 195 of the WIA Act apply to all programs
under Title I and ARRA Title VIII except as provided elsewhere in the WIA and ARRA Acts
and OMB regulations.

WORKFORCE INVESTMENT ACT OF 1998

Since the inception of the Workforce Investment Act of 1998 (WIA), it has been the vision of
the State of Georgia to have a world-class workforce investment system that enables
individuals to achieve their highest potential, support and encourage entrepreneurship, ensure
that employers have the skilled workers they need to compete effectively in the global
economy, and capitalize on the untapped potential of underemployed and discouraged
workers including youth and other workers with special needs.

The mission of the State of Georgia’s WIA program is to bring business, labor, education,
and the public sector together to develop strategies and support efforts to best meet the needs
of the State’s workforce and employers, thereby enhancing Georgia’s competitiveness in the
global economy.

In 1999, the Governor of Georgia directed the Commissioner of the Georgia Department of
Labor (GDOL) to serve as his designee for the implementation and oversight of the
Workforce Investment Act. To this end, the GDOL strives to make available a superior
workforce around the State by providing clear, viable, and accurate information, guidance,
and support for the local areas that administer the program across the State.


AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009

“The Recovery Act” is intended to preserve and create jobs, promote the nation’s economic
recovery, and assist those most impacted by the recession. It provides the U.S. Department
of Labor and the public workforce investment system with unprecedented levels of funding
for a number of employment and training programs to help Americans acquire new skills and
get back to work.” U.S. Department of Labor Training and Employment Guidance Letter No.
13-08 dated March 6, 2009.




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WHERE TO FIND INFORMATION ON WIA

Local Workforce Investment Areas may contact the GDOL to find information regarding any
questions they may have concerning the WIA program. (A complete synopsis on the WIA
requirements for Local Areas can be found in Appendix A
.) The internet also provides great
resources for WIA regulations and requirements on both Federal and State websites. The
following is a list of useful websites available to help answer any questions you may have.
This list, which is not all-inclusive, is offered only as assistance to the LWIAs.

 www.firstgov.gov

 www.whitehouse.gov/omb/circulars/index.html

 www.gpoaccess.gov/cfr/

 www.dol.state.ga.us

 www.dol.gov

 www.doleta.gov

 http://wdr.doleta.gov/directives

 www.workforceatm.org

 www.nawb.org

 www.archives.gov

 www.workforcetools.org/abbreviations.asp

 www.doleta.gov/sga/pdf/FinalTAG_August_02.pd



WHERE TO FIND INFORMATION ON ARRA

 www.whitehouse.gov/omb/recovery


 www.recovery.gov


 www.federalreporting.gov


 www.naswa.org


 www.workforce3one.org









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CHAPTER 2
: FUND DISTRIBUTION/FUNDING PROVISIONS


 WIA AND ARRA GRANT AVAILABILITY REQUIREMENTS
 ALLOCATION OF WIA AND ARRA FUNDS
 PERIOD OF AVAILABILITY
 EXPENDITURE/OBLIGATION REQUIREMENTS
 THIRTY PERCENT OUT-OF-SCHOOL YOUTH EXPENDITURE
REQUIREMENT
 TRANSFER AUTHORITY
 REQUEST FOR ADDITIONAL FUNDS
 RECAPTURE/REALLOCATION OF UNOBLIGATED FUNDS

 PROGRAM INCOME
 STAND-IN COSTS













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WIA GRANT AND ARRA AVAILABILITY REQUIREMENTS

Congress appropriates funds for WIA Title I & American Recovery Investment Act of 2009
(ARRA) programs by individual funding streams: Adult, Dislocated Worker, and Youth
programs. Under the Governor-Secretary Agreement, funds are authorized for expenditure
through a grant agreement and associated Notices of Obligation (NOO). The grant agreement
is entered into on a program year (PY) basis between the Governor or the State’s designated
representative and the Secretary of Labor or the USDOL Grant Officer. For States, funds are
available for expenditure during the Program Year of allotment and the two succeeding
Program Years. For local areas, funds are available for the year of allocation plus one
succeeding year.

Of the funds allotted to Georgia for Adult, Dislocated Worker, and Youth activities,
GDOL reserves 15 percent of each funding stream for statewide activities, including 5
percent for State administrative activities. The State also reserves 25 percent of the funds
available in the Dislocated Worker funding stream for statewide rapid response activities.
The remaining funds are allocated to local areas in accordance with WIA Sections 128 and
133 and the regulations at 20 CFR 667.130.

With the PY 2010 allocation of adult and youth funds, Georgia implemented 90% hold
harmless provision to its adult and youth allocation calculations. Each area’s allocation
factor must be at least 90% of the average of the last two years’ allocation factors, if funds
appropriated in a fiscal year are sufficient. If appropriated funds are reduced, the amounts
allocated to each local area must be ratably reduces.

ALLOCATION OF WIA FORMULA FUNDS

The Act requires that the State allocate specific percentages of the WIA allotments to local
workforce investment areas based upon formula factors specified in the Act. Eighty-five
percent of the WIA Title I Adult and Youth funds are distributed to local areas according to
methods specified in WIA Section 133(b). Below is a summary of Georgia’s methodology:

ADULT FUNDS


The standard allocation formula gives equal weight to the following three formula factors:
33.3% Relative number of unemployed individuals in areas of substantial
unemployment in each local area, compared to the total number of
unemployed individuals in areas of substantial unemployment in the State,
33.3% Relative excess number of unemployed individuals in each local area,
compared to the total excess number of unemployed individuals in the State, and
33.3% Relative number of disadvantaged adults in each local area, compared to the
total number of disadvantaged adults in the State

YOUTH FUNDS


The standard allocation formula gives equal weight to the following three formula factors:
33.3% Relative number of unemployed individuals in areas of substantial
unemployment in each local area, compared to the total number of
unemployed individuals in all areas of substantial unemployment in the State,
33.3% Relative excess number of unemployed individuals in each local area,

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compared to the total excess number of unemployed individuals in the State, and
33.3% Relative number of disadvantaged youth in each local area, compared to the
total number of disadvantaged youth in the State
Note: Georgia has no local areas with rural concentrated employment program
grants

DISLOCATED WORKER FUNDS


Georgia distributes 60% of available funds by formula to local areas. Funds are allocated
according to the six Federally mandated factors, plus three additional State-determined
factors. The factors and their weights are as follows:

40% Number of individuals who received unemployment insurance without
earnings, for the most recent six-month period.
05% Number of unemployed individuals in excess of 6.5% of the civilian labor
force for the most recent six months.
10% Number of individuals who received unemployment insurance who were from
firms that were part of the Mass Layoff Statistics data for the latest two
quarters.
10% Number of individuals employed in industries that have experienced a decline
in employment of 5% or greater over the last year.
2.5% Number of individuals employed as farmers or rancher according to the most
recently available census data.
2.5% Number of individuals who collected unemployment for 15 weeks or more for
the last six-month period.
10% Number of individuals employed in manufacturing, mining, and agriculture
for the last six-month period.
10% Number of individuals employed in retail and wholesale trade for the last six
month period.
10% Number of individuals enrolled in WIA dislocated worker training services
during the prior program year.

PERIOD OF AVAILABILITY

WIA grant funds allotted to States for a program year are available for expenditure for that
program year and the two succeeding program years. In the first year of the State’s
allotment, funds allocated to local areas under the State’s WIA allocation formula (generally
referred to as formula funds) are available for expenditure during the initial and succeeding
program year.

The WIA/ARRA grant funds are a supplement to the PY 08 WIA formula funds. These
funds are available for expenditure from February 17, 2009 through June 30, 2011.

WIA operates on a Program Year basis that runs from July 1 through June 30. Federal
obligation and spending requirements apply to the total funds allocated for and/or during a
Program Year. The determination of whether a local area has met the expenditure and/or
obligation requirements discussed later in this chapter is based upon reported expenditures as
of June 30.


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USDOL obligates Program Year funds to States via a Notice of Obligation (NOO) at three
different points in time. Program year (PY) adult and dislocated worker formula funds are
available on July 1 at the beginning of the program year and end on June 30 of the
subsequent year (24 months). Youth funds are made available beginning on April 1, three
months prior to the beginning of the program year, and expire on June 30 of the subsequent
year (27 months).

Fiscal year (FY) adult and dislocated worker funds are available October 1 through June 30
of the following year (21 months). FY funds are part of the Program Year allocation and are
included in the June 30 determination of whether obligation and expenditure requirements
have been met.

For the LWIA grant funding periods chart and an explanation of the grant number structure,
see Appendix C
.

GDOL may also issue rapid response grants based upon need and requests for additional
funds. These grants may have a shorter period for expenditure. Also, national emergency
grant funds may have a shorter, or longer, expenditure period of availability.

OBLIGATION/REOBLIGATION PROCESS

STATE EXPENDITURE/OBLIGATION REQUIREMENTS

WIA requires that the State obligate at least 80% of the allotted program year funds by
funding stream by June 30
th
of the first program year of availability. This obligation
requirement includes funds available at the local and State levels. If the 80% obligation
requirement is not met, USDOL may deobligate the difference between the actual obligation
rate and the 80% target. These funds are deobligated in the subsequent program year
allotment. The 80% obligation requirement applies to each funding stream, not total WIA
availability.

LOCAL AREA EXPENDITURE/OBLIGATION REQUIREMENTS

WIA requires that the State establish uniform procedures for the obligation of funds by local
areas so that funds allocated to Georgia are not made available for reallocation to other
States. In accordance with the provisions of the Workforce Investment Act, the State may
deobligate and reallocate local area youth, adult, and dislocated worker funds because of
under-obligation of grant funds by an LWIA in the first year of availability (Sections 128 (c)
and (133 (c) of the Act); however, on the second program year of availability the funds will
revert back to the State. The amount to be recaptured from a local area because of under-
obligation is the amount by which the prior program year’s unobligated balance of formula
funds exceeds 20 percent of the year’s allocation. This is generally referred to as the 80%
obligation requirement.

Unobligated balances are determined based on the local area’s allocations and for grant
availability adjustments due to voluntary deobligation or the award of additional formula
funds. Any deobligation for not meeting the 80% requirement excludes administrative funds.
The amount to be deobligated is separately determined for each funding stream (20 CFR
667.160(b)).


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Funds deobligated based upon the 80% requirement may be reallocated to local areas. To be
eligible to receive youth, adult, or dislocated worker funds under the reallocation procedures,
local areas are encouraged to expend at least 70% of the prior program year’s allocation, less
any amount reserved (up to 10 percent) for the cost of administration. If the State determines
the amount recaptured would be immaterial after being reallocated among eligible LWIAs, it
may request the LWIAs to voluntarily deobligate the funds to be used by local areas based
upon current need and not allocation factors. The State may also determine the amount to be
deobligated is immaterial and may waive the deobligation requirement.

LOCAL EXPENDITURE REQUIREMENTS

Local formula funds not expended by an area in the second year of availability must be
returned to the State. This requirement includes the expenditure of both program and
administrative funds. After receipt of the LWIA’s closeout package at the end of the second
year of availability, if an LWIA has not fully expended its funds in each of the funding
streams, the State will issue a final grant adjustment, deobligating the unexpended funds and
closing the grant. The deobligation of the unexpended WIA/ARRA funds will follow the
same deobligation process as of the formula funds (20 CFR 667.160(b)).

THIRTY PERCENT OUT-OF-SCHOOL YOUTH EXPENDITURE REQUIREMENT

WIA requires that at least 30 percent of the youth funds allocated to a Local Area be “used to
provide youth activities to out-of-school youth” (WIA Section 129(c4)(A); Final Rule
664.320). The 30 percent requirement applies to the 90% program portion of youth funds
allocated to LWIAs.

Essentially, this means that at least 30 percent of a local area’s youth allocation (adjusted for
any recapture or reallocation of funds and reduced for actual administrative expenses) must
be spent on out-of-school youth activities. Local Areas have two years to comply with this
requirement – the year that youth funds are allocated and the succeeding year.

If a LWIA uses some of its youth administrative funds for youth program expenditures, the
total youth program portion of availability is increased and the 30% out-of-school youth
requirement is determined based upon this revised total. The Local Area’s actual out-of-
school youth expenditures indicated on their Financial Status Report are compared to the
minimum 30% out-of-school youth expenditure level to determine compliance.


TRANSFER AUTHORITY (WIA INTER-TITLE TRANSFER WITH-IN AN ENTITY)

Beginning December 2004, LWIAs in the State of Georgia were authorized to transfer up to
30 percent of their Workforce Investment Act (WIA) Program Year allocation between the
Adult/Dislocated Worker programs (TEGL 23-02, April 1, 2003). The State must approve
the transfers. No transfers of WIA funds are authorized for the Youth program (20 CFR
667.140).

WIA Section 133(b)(4) provides the authority for local workforce investment areas, with
approval of the Governor, to transfer up to 20 percent of the Adult Activities funds to
Dislocated Worker Activities, and up to 20 percent of Dislocated Worker Activities funds to
Adult Activities. It should be noted that this is different than the 30 percent currently

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permitted for regular formula funds pursuant to prior year appropriation acts. The State must
submit a waiver plan to U.S. Department of Labor (USDOL) for approval of any WIA
transfer above the 30 percent threshold. During Program Year 2008, the State received a
waiver approval for 100 percent transfer of Adult and Dislocated Worker funds. The State
requested a waiver plan for an increased percentage in the amount a state is allowed to
transfer between the WIA Adult and Dislocated Worker funding streams in Program Year
2009 and Program Year 2010. For the Program Years 2010 and 2011 WIA formula funds
waiver request, transfer authority is limited to 50 percent effective through June 30
th
2012.

As stated in U.S. Department of Labor ETA Training and Employment Guidance Letter
(TEGL) No. 14-08, Section 19, issued on March 18, 2009, the waiver does not apply to funds
made available through the American Recovery and Reinvestment Act of 2009 (ARRA) .
However, the State is permitted to transfer up to 30 percent of ARRA funds between Adult
and Dislocated programs under WIA and under Department of Labor Appropriations Act of
2009. This authority is discussed in TEGL No. 14-08, change 1. No transfers of ARRA
funds are authorized for the Youth program (20 CFR 667.140).

Transferred funds retain their Federal year-of-appropriation identity and must be accounted
for and reported accordingly. For example, PY 2009 WIA Title I Adult funds can only be
transferred to the PY 2009 WIA Title I Dislocated Worker program. Effective October 1,
2007, a new approved quarterly financial reporting form was implemented requiring all
USDOL ETA Grantees to report the expenditure of transferred funds with the fund source in
which the transfer was provided (TEN 12-07, October 1, 2007). Transferred funds are no
longer accounted for and reported to the USDOL as part of the total available funds in the
receiving program. For example, if Adult funds are transferred to the Dislocated Worker
program, the funding source paying for the Adult funds expended on the Dislocated Worker
program remains the Adult fund source.

Transfer requests must be made in writing to the State via an inter-title “Transfer Authority
Request Form” (See Form in Appendix F
). Transfer requests approved by the State will
result in the applicable grants being adjusted in the FSR Grants Management System to
indicate the transfer of funds from and into the respective programs. The issuance of an
approval letter will serve as the LWIA’s official notification that the transfer is approved.
Conversely, LWIAs will receive written notification of any transfer request that is not
approved by the State.

It is expected that areas requesting transfers will have implemented its most in need/limited
funds policy for the receiving funding stream prior to the request for transfer of funds. The
State expects that any transfer of funds will not adversely impact the:

 Employment and training activities of the program that funds are being transferred
from or the program that funds are being transferred to; and

 WIA Title I performance measures for the Adult or Dislocated Worker programs.

Areas that repeatedly request transfers from one particular funding stream are subject to
review of their program design for that program and will receive technical assistance in
program design for that target population.

More information can be found at WIA Section 133(b) (4) and Final Rule § 667.140.

15


REQUEST FOR ADDITIONAL FUNDS

Local Areas which project a budget shortfall, or demonstrate a need for a special project,
may request additional funds from GDOL. Additional Funds request must be made in writing
to the state (See Form in Appendix F
). Funds may be available at the state level if one of the
following is the case:

 Another LWIA voluntarily deobligate funds.

 Funds have been involuntarily deobligated from LWIAs because of under obligation
and/or expenditure.

 Rapid Response (25%) funds that are not projected to be needed at the State level for
WIA staff costs to perform required statewide Rapid Response Activities, Rapid
Response cost of transition centers, technical assistance, incentive grants, or other
special Rapid Response projects GDOL has undertaken to support and improve WIA
and WIA/ARRA services.

In reviewing requests for additional funds, GDOL will consider, among others, the following
factors:

 Does the request include clear documentation of need? Are the circumstances/events
described in the application supported by appropriate documentation?
 Is the shortage of funds due to inadequate planning for and tracking of registrations
and expenditures by program? Does the LWIA have a waiting list?
 Has the local area demonstrated adequate planning and financial management? Have
expenditures per registrant been close to historical averages? Is the local area
managing its registrations for various fund sources adequately or could some
individuals be moved to other available fund sources?
 Did the LWIA implement its most in need/limited funds policy in sufficient time to
prevent a projected over expenditure of funds?
 From an historical perspective, have obligations reported on the FSR materialized
into expenditures? Has the local area not been subject to deobligation? Has the local
area maintained a good tracking system for ITAs and support costs?
 Has the local area voluntarily deobligated excess funds in the past?
 What program design efficiencies can be implemented to reduce overall costs? Is the
local area willing to implement such changes to existing and future projects?
 An identified need for additional services and/or a special project in the local area.

LWIAs may be required to submit a line-item budget to support the request for additional
funds. If GDOL approves the request, a grant adjustment or grant award will be issued to the
LWIA. Issuance of the grant/grant adjustment will serve as the official notification that the
Request for additional Funds has been approved. Local Areas will receive written
notification of any Request for Funds that is not approved.





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RECAPTURE/REALLOCATION OF UNOBLIGATED FUNDS

GDOL retains the authority to approve the involuntary recapture of unobligated funds at the
local level and subsequent redistribution of WIA Title I and ARRA Title VIII Adult, Youth,
and Dislocated Worker Local Area formula funds allocated to each LWIA under WIA
Sections 128 and 133.

Governors may recapture and reallocate excess unobligated funds among local areas
in the state at the end of each program year, per WIA Section 127 (a), 128 (c) and
133 (b). Because Recovery Act WIA funds were only available for three months in PY
2008, ETA has determined that moving funds so soon afterward defeats the purpose
of the Act. Thus, ETA has determined that it is imprudent to permit Governors to
recapture and reallocate Recovery Act funds at the end of PY 2008 as well.
Governors may recapture and reallocate Recovery Act funds that are eligible for
recapture and reallocation in accordance with 20 CFR 667.160 at the end of PY
2009. The WIA recapture and reallocation requirements, including the calculations
relating to the percentage of funds that have been obligated, are to be applied to
Recovery Act WIA formula funds separately from the application of these
requirements to the PY 2009 regular WIA formula funds (TEGL No. 14-08, Change
1, dated April 15, 2009).

20 CFR § 667.160
What reallocation procedures must the Governors use?
(a) The Governor may reallocate youth, adult, and dislocated worker funds among
local areas within the State in accordance with the provisions of sections 128(c) and
133(c) of the Act. If the Governor chooses to reallocate funds, the provisions in
paragraphs (b) and (c) of this section apply.
(b) For the youth, adult and dislocated worker programs, the amount to be
recaptured from each local area for purposes of reallocation, if any, must be based
on the amount by which the prior year’s unobligated balance of allocated funds
exceeds 20 percent of that year’s allocation for the program, less any amount
reserved (up to 10 percent) for the costs of administration. Unobligated balances
must be determined based on allocations adjusted for any allowable transfer between
funding streams. This amount, if any, must be separately determined for each funding
stream.
(c) To be eligible to receive youth, adult or dislocated worker funds under the
reallocation procedures, a local area must have obligated at least 80 percent of the
prior program year’s allocation, less any amount reserved (up to 10 percent) for the
costs of administration, for youth, adult, or dislocated worker activities, as separately
determined. A local area’s eligibility to receive a reallocation must be separately
determined for each funding stream (20 CFR § 667.160).

In addition, LWIAs may voluntarily request that WIA Title I and ARRA Title VIII Adult,
Youth, and Dislocated Worker formula allocated funds be deobligated from one or more of
their respective program allocations.

Deobligated funds may:

1. Be provided to other local areas based upon a request for additional funds from the
receiving LWIA

17
2. Be awarded directly to another LWIA with a demonstrated need
3. If no LWIA is specified to receive the deobligated funds, the funds will be
redistributed to LWIAs meeting the 70% targeted expenditure level in the respective
funding stream.
4. May be utilized at the State’s discretion.

For reference, voluntarily deobligated funds retain their year-of-appropriation identity and
must be accounted for and reported accordingly.

Approved requests for the voluntary deobligation of funds will result in the applicable grant
being adjusted to indicate the deobligation from the respective program. The issuance of a
revised grant will also serve as the LWIA’s official notification that the voluntary
deobligation is approved. Conversely, LWIAs will receive written notification of any request
that is not approved. The LWIA receiving the voluntary deobligation will also be issued a
revised grant adjustment adding funds to the respective funding stream.

The specific forms needed for submitting a request to voluntarily deobligate funds can be
found in Appendix F.





PROGRAM INCOME

Program income is defined in 29 CFR 97.25(b) as income received which is directly
generated by a grant or sub-grant supported activity or earned as a result of the grant or sub-
grant. Program income includes:
1) income from fees for services performed and from conferences;
2) income from the use or rental of real or personal property acquired with grant or sub-
grant funds;
3) revenues earned by a governmental or non-profit service provider under either a
fixed-price or reimbursable award that are in excess of the actual costs incurred in
providing the services; and
4) interest income earned on funds received under WIA Title I.

The local area must ensure that sub-recipients and subcontractors are aware that all program
income must be accounted for and reported to the local area. Program income must be
recorded in the local area’s accounting records and reported to GDOL on the monthly
Financial Status Report. Program income may only be expended for allowable purposes
under the grant that generated the income. Program income must be expended to expand
services under the WIA grant responsible for generating the income.

Information on program income can be found at 29 CFR 95.24 and 20 CFR 667.200 (a)(5).

EXAMPLES OF PROGRAM INCOME
1. Fee for Services
. The One-Stop operator provides pre-employment services for a
number of private businesses. There is a per-head fee for these services. The fees are
considered program income.

18
2. User or Rental Fees
. The local Job Service has purchased a fax machine with
Wagner-Peyser funds and allows usage by Veterans’ program and UI representatives.
A per-page fee is charged for such use. The fees are considered program income.
3. Sale of Products
. As part of a course on small business development, materials are
bought and used to manufacture small items. The proceeds from the sale of these
items are considered program income. If the goods produced were written materials,
the sales of materials would also be considered program income.
4. Revenues in Excess of Expenditures
. A nonprofit youth service provider has a fixed-
price contract for the provision of placement services to out-of-school youth. Based
on their performance, they have earned revenues that exceed the costs incurred by the
organization in providing the services. These revenues are considered program
income.
5. Interest Income Earned from Funds
. A nonprofit LWIB maintains an interest-bearing
account for all grant revenues. The LWIB receives funding from both WIA and non-
WIA ETA-funded grants. The interest earned on the WIA revenues greater than $250
per year would be treated as program income and added to the total WIA grant. The
interest earned on non-WIA ETA fund advances would not be considered as program
income, but interest amounts over $250 per year would be returned to the Federal
government in accordance with the requirements of 29 CFR 95.22.



STAND-IN COSTS

Stand-In Costs (SIC) are costs that are paid from non-Federal sources. These costs are
otherwise allowable but are not reported as Federal Expenditures due to Federal funding
limitations. If the grant recipient or sub-recipient proposes to substitute the SIC for Federal
costs disallowed as a result of an audit or other review the following conditions must be met.
In order to be considered as valid substitutions, the Stand-In Costs must be:
1. Reported on the monthly FSR as uncharged costs under the same grant and the same
program year in which the disallowed costs were incurred
2. Incurred for allowable WIA activities
3. Accounted for in the financial management system and records maintained. The
costs must be treated in a manner consistent with other Federal expenses, to include:
a. Supporting documentation
b. Actual costs must have been incurred
c. Cost allocation and cost classification methodologies, if appropriate
4. Included within the scope of the audit report
5. Exclusions – some examples
a. In-kind contributions cannot be used because they cannot be charged to the
Federal grant
b. Uncompensated overtime
c. Unbilled premises costs associated with a fully depreciated publicly owned
building
d. Allocated costs derived from an improper allocation technology
e. Discounts, refunds, rebates
f. Any State share of the cost of State or community college tuition

19
CHAPTER 3
: FINANCIAL MANAGEMENT SYSTEM


 INTRODUCTION
 FINANCIAL MANAGEMENT SYSTEM STANDARDS
 FEDERAL/STATE REPORTING DEFINITIONS
 ACCRUALS
 OBLIGATIONS
 DRAWDOWNS
 FINANCIAL STATUS REPORTS
 1512 ARRA REPORTS
 TOTAL FEDERAL EXPENDITURES
 CONTRACT DEOBLIGATION PROCESS
 OVERSIGHT & MONITORING
 SECTIONS FOR GDOL-MANAGED AREAS ONLY

 FEDERAL ACCOUNTING REPORTING SYSTEM
 FIFO/ADJUSTMENT PROCESS











20


INTRODUCTION

The LWIAs’ financial management systems must provide information for any required
Federal records and reports that are uniform in definition, accessible to authorized Federal
and State staff, and verifiable for monitoring, reporting, auditing, program management, and
evaluation purposes. In addition, the system must provide for internal controls and
accounting procedures that:
 Are in accordance with generally accepted accounting principles including:
 Provision of information pertaining to sub-grant and grant awards,
obligations, unobligated balances, assets, liabilities, expenditures, and income
 Effective internal controls to safeguard assets and assure their proper use
 Assessment of actual expenditures with budgeted amounts for each sub-grant
and grant
 Source documentation to support accounting records
 Proper charging of costs and cost allocation, and
 Are sufficient to:
 Permit preparation of required reports
 Permit the tracing of funds to a level of expenditure adequate to establish that
funds have not been spent unlawfully
 Permit the tracing of program income, potential stand-in costs and other funds
that are allowable
 Comply with applicable uniform cost principles included in appropriate OMB
circulars for the type of entity receiving funds.

FINANCIAL MANAGEMENT SYSTEM STANDARDS

Both 29 CFR 97.20(b) and 95.21(b) establish a set of standards that must be included in the
financial management systems of grantees and sub-grantees. Each of these seven standards is
discussed below.

FEDERAL REQUIREMENTS
Financial Reporting


Accurate, current, and complete disclosure of the financial results of WIA grant activities
must be made in accordance with GDOL grant reporting requirements. This means that the
allowable costs reported to GDOL must be traceable to accounting records. In addition, all
allowable costs and activities must be reported, and the reports must be submitted in the
format specified by GDOL. For WIA grants, the LWIA must report expenditures and
obligations on a monthly basis for each open grant. The LWIA must use the web-based
Financial Status Reporting System to report cumulative monthly financial activity.


Accounting Records


All grantees must keep records that adequately identify WIA funds. The records must contain
information pertaining to grant and sub-grant awards, obligations, unobligated balances,

21
assets, liabilities, outlays or expenditures, and income. The records must be maintained in
accordance with Generally Accepted Accounting Principles (GAAP). Grantees and sub-
grantees may use either the cash or the accrual method of accounting; however, expenditures
must be reported to the GDOL on an accrual basis. If the records are maintained on a cash
basis, the grantee or sub-grantee must maintain a set of linking records, typically accrual
spreadsheets, so that the reported costs are traceable during monitoring or auditing to the
official accounting records or books of account.

Internal Control


Internal control is defined as an accounting procedure or system designed to promote
efficiency or assure the implementation of a policy or safeguard assets or avoids fraud and
error. Effective control and accountability must be maintained for all grant and sub-grant
cash, real and personal property, and other assets. Internal controls are designed to provide
safeguards for Federal funds. For example, payments may not be authorized solely by an
employee who also has the authority to sign checks. Internal controls for property often are
inherent in the inventory system that tracks purchases and locations or use of property
procured with grant funds. Grantees must adequately safeguard all such property and must
assure that it is used solely for authorized grant activities, including shared One-Stop
activities.

Budget Control


Actual expenditures or outlays must be compared with budgeted amounts for each grant or
sub-grant. This is often referred to as a “planned vs. actual” analysis. The results of such
analyses should be used to preclude overspending and/or to modify contracts and
agreements.

Financial information must be related to performance or productivity data, including the
development of unit cost information whenever appropriate or specifically required. This
information should be used in developing plans and Financial Management Systems
monitoring.

Allowable Costs


Applicable OMB cost principles, WIA regulations, and the terms of the grant agreement
must be followed in determining the reasonableness, allowability, and allocability of costs.
Only allowable costs may be charged to a WIA grant, and no WIA grant may pay for more
than its fair share of the costs (allocability), which means that the LWIA must determine if
the costs incurred by the organization are allowable based on established guidelines that are
addressed in Chapter 4
and the associated appendix (Appendix G
).

Source Documentation


Accounting records must be supported by source documentation such as canceled checks,
invoices, purchase orders, paid bills, payrolls, time and attendance records, contract and sub-
grant award documents, tax records, etc. Source documentation is the proof that costs
reported to GDOL are, in fact, allowable and allocable to the grant. This source
documentation must be available for review by USDOL, GDOL and auditors and directly
relate to the costs claimed on the Financial Status Report (FSR).

22


Cash Management


Procedures for minimizing the time elapsing between the transfers of funds from GDOL to
the LWIA must be followed whenever advance payment procedures are used. When
advances are made by electronic transfer of funds methods, the LWIA must forecast cash
needs to ensure that cash is received as close as possible to the time of actual disbursement.

STATE SUPPLEMENTAL REQUIREMENTS
Computer Back-Up


As a component of records retention, each LWIA is expected to have a recovery plan in case
of computer and/or data failure. Since substantial amounts of information are now being
maintained on computerized systems, developing a back-up process in case of local or
system failure is necessary. This process should include, at a minimum, items such as a
periodic back-up of data and a system to recover data when a computer malfunction occurs.
LWIAs may also consider off-site back-up data storage. The goal of the computer back-up
system should be to ensure timely recovery from a system and/or data failure and the ability
to maintain a continuous operation.

Check Signatory


In keeping with sound Internal Controls and safeguarding of assets, all recipients of WIA and
State funds must implement the following procedure:
 Co-signatory agents must be utilized on all checks drawn against these funds
 The payee of a check cannot be a co-signatory agent on the same check
 For those organizations such as State agencies, municipalities, and corporations
whose check signatory policy is not in compliance with this policy, the GDOL may
grant exceptions upon a written request of a waiver detailing the present policy and an
explanation as to why co-signatories are not feasible. The requested waiver should
also include the mitigating factors that prevents or hinders the use of co-signatories

Time and Attendance Records


The LWIA is required to ensure that all staff involved in the administration of WIA funds
and any sub-recipients receiving these funds maintain time and attendance records for all
staff involved in WIA and State-funded programs. Staff members must verify these records
by their signatures and the signature of their immediate supervisor. If an electronic signature
is used with a staff member or a supervisor, please add the appropriate initials in blue ink
next to the signature. In addition, any staff whose time is divided between the two categories
(administration and program) must detail the time spent in each category on their time
records.

Subcontractors must establish and maintain time and attendance records for their staff and for
participants in training. LWIAs must monitor and review these sub-recipient records to
ensure that the method used meets generally accepted accounting principles.



23
Unclaimed Check Policy


Any checks written for the distribution of WIA funds (i.e., support payments, and/or wages)
that are unclaimed are subject to the provisions of the Georgia escheat law. Refer to the
grant closeout instructions to determine how to handle unclaimed checks.

Incident Reporting Procedures


OMB Circular A-87 establishes principles for determining allowable costs incurred by
governmental units which have received grants. The application of these principles is based
on the fundamental premise that governmental units are responsible for efficient and
effective administration of Federal awards through the application of sound management
practices.

Therefore, any activity that raises questions concerning possible illegal expenditures, other
unlawful activities, or gross mismanagement of funds should be reported to the GDOL and
the State Office of Inspector General (OIG).
Individuals may also report such incidents directly to the USDOL Office of Inspector
General (OIG). The OIG administers an investigative program to detect and deter fraud,
waste, and abuse in USDOL programs. They conduct criminal, civil, and administrative
investigations relating to violations of Federal laws or regulations, concerning USDOL. OIG
investigations address:
 Criminal activity
 Program abuse
 Employee misconduct
 Unethical behavior by recipients of resources administered by USDOL, including
grant and contract funds
Fraud, Waste, and Abuse

Fraud is an act of intentional or reckless deceit to mislead or deceive. Waste is a reckless or
grossly negligent act that causes funds to be spent in a manner that was not authorized or
represents significant inefficiency and needless expense.

Abuse is the intentional, wrongful,
or improper use or destruction of resources, or seriously improper practice that does not
involve prosecutable fraud. Individuals who provide information on allegations of fraud,
waste, abuse, and mismanagement of Federal funds may remain anonymous, ask that their
identities be held in confidence, or provide their names, with no restrictions. This
confidentiality policy applies to incidents reported to both the Federal and State OIG and to
the State.
Please see Appendix H
for additional reports and guidance.


FEDERAL/STATE REPORTING DEFINITIONS

As stated in the introduction to this section, LWIA financial management systems must
provide information for any required Federal records and reports that are uniform in
definition. The application of uniform definitions of expenditures, accrued expenditures, and
obligations at the LWIA and contractor levels has become critical since the inception of
WIA. The State and USDOL are concerned that the failure to report accruals and
obligations correctly may lead to a loss of funds. During the previous program years,

24
Congress has rescinded WIA funds that were already awarded to States and LWIAs because
of what appears to be a lack of services to customers reflected by an under expenditure of
WIA funds. In addition, the proposed expenditure requirement in the WIA reauthorization
bill would significantly modify LWIA reporting. It would require that LWIA’s and States
expend at least 70% of their total availability (including carryover funds) by funding stream
each program year or be subject to deobligation. This would essentially abolish the 80%
obligation requirement and move the LWIAs and States to just reporting accrued
expenditures.

Grantees and sub-grantees must report WIA financial activity on an accrual basis, regardless
of their basis of accounting, accrual/cash/modified accrual. The objective of this requirement
is 1) to ensure that USDOL financial data presented to Congress represents the current and
accurate financial position of States and LWIAs, and 2) to ensure that data reported by
grantees represents accurate and full disclosure of the program.



ACCRUALS

At its most simplistic level, an accrual is debt that has been incurred by the agency and must
be paid, but has not yet been paid. A service has been rendered or a product ordered and
received, but no payment has been made. Expenditures incurred are recognized in the
accounting period in which they occur, regardless of whether or not the cash payment is
made.

Obligations and accruals are not the same thing. If the product/service has been delivered,
but the invoice has not been paid, the LWIA would report this as an accrual. Accruals may
include salaries earned but not paid; participant tuition at the time of registration and books
and fees owed, but not paid; utilities used but not paid, etc. LWIAs should not report
accruals as obligations on the FSR. LWIAs may estimate their accruals if they have
sufficient data to support their estimates. This is especially critical if service providers are
generally late submitting invoices to the LWIA for payment.

Accruals reported must be reversed or cleared out in the local area’s accrual spreadsheet
when paid and included on subsequent reports as cash expenditures. Local entities have 90
days after all funds have been expended or the period of availability has expired to liquidate
the accruals recorded during period of performance (Training and Employment Guidance
Letter (TEGL) #16-99, Change #1, November 6, 2002)(29 CFR 97.23).

Accrued expenditures for the purposes of reporting the local area’s WIA financial status
equal actual cash payments, plus the cost of services or goods that have been received or are
being provided (e.g. the cost of a semester of tuition that has not been paid but participants
are registered or in training). The point at which tuition, books, and fees can legitimately be
considered an accrued expenditure occurs if it is paid up front for the current semester or if
the participant is currently enrolled and receiving training. If all monies are due and payable
at registration or when class starts, the LWIA can record an accrued expenditure for the total
cost unless the payment agreement specifies a different time frame, e.g. payment upon
invoicing. For additional guidance on what constitutes an accrual, please see TEGL 28-10
.


25
ACCRUAL ACCOUNTING
The accrual method of accounting recognizes the effects of transactions or events on
financial resources of the entity when these transactions take place, regardless of when cash
is paid. Expenditures are recognized when the transactions result in a claim against financial
resources of the agency. The accrual method of accounting gives a more accurate picture of
the financial situation of the agency than the cash method.

Even though most LWIAs use a modified accrual or cash accounting basis, FSRs must be
prepared reflecting the LWIA cumulative accrued expenditures for the reporting period.

ACCRUED EXPENDITURES DEFINED
Accrued WIA expenditures include:

 The sum of actual cash disbursements for direct charges for goods and services
 The net increase or decrease in the amounts owed by recipients
 Goods and other property received for services performed by employees, contractors,
sub-grantees, or other payees, and
 Other amounts becoming owed for which no current services or performance is
required

Based on the Training & Employment Guidance Letter (TEGL) 2-94, Change 1, dated
January 26, 2004 and reiterated in TEGL 28-10
, dated May 27, 2011, accrued expenditures
for the purposes of reporting the local area’s WIA financial status equal actual cash
payments, plus the cost of services or goods that have been received or are being provided
(e.g. the cost of a semester of tuition that has not been paid but participants are enrolled and
in training).

HINTS ON HANDLING ACCRUALS
 Accruals reported must be reversed or cleared out when paid and included on
subsequent reports as cash expenditures.
 Expenditures incurred must be recognized in the accounting period in which they
occur, regardless of whether or not the cash payment is made.
 Obligations and accruals are not the same thing. Do not report accruals as
obligations.

OBLIGATIONS

Defined at 20 CFR 660.300 as the amounts of orders placed, contracts and sub-grants
awarded, goods and services on order and similar transactions during a funding period that
will require payment by the recipient or a sub-recipient during the same or a future period.
Commitments are to be treated the same way as similar commitments of the recipient’s or
sub-recipient’s non-WIA funds, whether as obligations or otherwise (20 CFR 652 et al.,
Workforce Investment Act; Final Rules, II. Summary and Background, pg. 49298).
Obligations must be supported by valid purchase orders, contracts, and other binding written
agreements. Obligations do not include budgeted cost items such as projected staff cost. The
appearance of an item in a budget does not constitute an obligation.


26
According to the USDOL Comptroller General, an obligation is a definite commitment
which creates a legal liability. USDOL further states that obligations reported on the FSR
are the aggregate of legal commitments made by local grant recipients to pay for future
program activities for which an outlay (accrued expenditure) has not yet been recorded in the
local entities’ official accounting records. This amount should include the unexpended
portion of awards to sub-grantees and contractors. On the final FSR, this line item should be
zero. Legal commitments made by local grant recipients are considered an obligation at the
local level at the time of legal execution (signed by both parties) of applicable agreement(s).

Contract obligations must meet the following criteria:
 Legally binding—offer, acceptance, consideration made by authorized official—
consideration is the promise to pay a specific amount
 In writing
 A purpose authorized by law
 Properly executed (a contract cannot be considered an obligation unless it has been
signed by both parties to the agreement)
 Specific goods, real property, work, or services
 Must contain specific description of goods or services to be acquired otherwise it is
not a recordable obligation
 If quantity is indefinite, e.g. minimum and maximum amount, must use minimum

There have been discussions in the grantee community that projected training costs should be
counted as obligations. Projected training costs do not meet the definitions of obligations
found in 29 CFR 97.3 as they do not meet the requirement of being definite and certain, nor
do they constitute a legal liability until the participant is registered in a specific course.
Further, a Comptroller General decision related to pre-payment of tuition costs states that the
period covered by the pre-payment (i.e. the obligation) only extends to the current period the
participant is registered and attending classes (Comptroller General Decision [B-148283,
1962]. Therefore, while grantees need to be aware of future needs and should have a system
for managing these needs, the inclusion of such items as obligations would violate Federal
grantee accounting and ETA reporting standards. For additional guidance on what
constitutes an obligation, please see TEGL 28-10
.


ENCUMBRANCES

Obligations should not be confused with “encumbrances.” In accounting, an encumbrance
means an anticipated expenditure or funds restricted for anticipated expenditures.
Encumbrances are used by organizations to account for projected or budgeted costs that may
come due in a current period or a future period. Examples of encumbrances may include: the
rent that will be paid for the upcoming year; staff salaries that will be paid when the staff
actually performs the work; and projected training costs for participants that are in year long
or multi-year training programs. The above examples are encumbrances because none of
these items above meet the more stringent standards of being an obligation, such as being
definite and certain and creating a legal liability, and the costs associated with them may not
be paid in advance of the actual work, occupancy, or registration for training. Organizations
may use encumbrances to set aside funds for known future needs. Encumbrances need to be
reviewed on a periodic basis and either obligated or liquidated in order to manage fund
availability and use, in accordance with each entity’s accounting system requirements. For
additional guidance on what constitutes an encumbrance, please see TEGL 28-10
.

27

DRAWDOWNS

A Local Workforce Investment Area (LWIA) may request grant award funds in advance
from the Georgia Department of Labor (GDOL) to cover upcoming cash expenditures and
accruals to be paid within a short period of receipt of the cash. When advances are made by
Payment Management System (PMS)/Electronic Funds Transfer (EFT) methods, the grantee
must forecast cash needs to ensure that cash is received as close as possible to the time of
actual disbursement (One-Stop Comprehensive Financial Management TAG, July 2002).
Cash on hand should be limited to the amount needed for immediate disbursement. The
frequency of these advance requests is at the option of the LWIA, with a maximum of one
per day. Whether or not the LWIA request funds in advance or as reimbursement for prior
expenditures depends on the cash resources and cash flow of the LWIA.


When drawing down funds, funds are requested by specific grant award and include program
and administrative costs. These funds should be approximately equal to amounts identified
in the column labeled “Total Federal Expenditures” on the Financial Status Report (FSR)
submitted by the LWIA. [NOTE: The FSR includes both cash outlays and accruals.]

Worksheets should provide support documentation for both the Request for Drawdown and
the FSR. Also, a cash control ledger, or comparable instrument, should be maintained by the
LWIA to help avoid excess or shortage of cash on hand.

Cash available for disbursement for WIA program purposes, whether from drawdowns,
program income, rebates, etc., is considered to be WIA-funded grant cash on hand and
should be used by the LWIA before additional funds are requested. Even if the program
income is not spent until a later date, the cash associated with that program income must be
disbursed before additional cash is requested. The cash proceeds from earned program
income should be used immediately for whatever WIA-funded grant disbursement need that
exist. LWIAs should not leave cash resulting from earned program income sitting idle in a
bank account.

FINANCIAL STATUS REPORTS

Financial Status Reports (FSRs) are the means by which local areas report accurate, current,
and complete financial results for WIA and WIA/ARRA grant activities. FSRs must be
completed in accordance with State grant reporting requirements. FSRs for ARRA grants
should be tracked separately from WIA formula grants. Allowable costs reported must be
traceable to accounting records. In addition, all allowable costs and activities must be
reported, and the reports must be submitted in the format specified by the State. USDOL
requires that WIA and WIA/ARRA financial reports be made on an accrual basis.

The Department requires that FSRs be completed monthly on an accrual basis. If the grantee
accounting records are not normally maintained on an accrual basis, the accrual information
should be developed through an analysis of the records on hand or on the basis of best
estimates and included as expenditures on the FSR. For purposes of submitting the FSR,
expenditures should be reported for any WIA and WIA/ARRA grant that has not been
officially closed. Even if a grant has been fully expended during the program year, a FSR is
due on that grant each month.

28

FSRs should be submitted by the 20
th
of the month for the prior month’s activities. If a
LWIA cannot submit their FSRs by the 20
th
, they should contact the GDOL Grants and
Contracts Division as to when the reports can be expected.

Local areas are now required to report cash receipts. In addition, local workforce areas
should report the cumulative accrued Federal expenditures, by funding stream, for allowable
activities. Federal Expenditures are further broken down by administrative costs per funding
stream. Local areas are now required to separately report program and administrative costs
per funding stream. The youth funding stream is further broken down into expenditures for
out-of-school youth and in-school youth and for summer employment and other youth
activities. All reported expenditures and obligations must be reported in dollars and cents (i.e.
$200.16). Unliquidated obligations and the amount of unobligated funds should also be
reported by funding streams.

Local areas must report obligations monthly. Valid purchase orders, contracts, and other
binding written agreements must support obligations. Obligations do not include budgeted
cost items such as projected staff cost. The appearance of an item in a budget (or
encumbrance) does not constitute an obligation.

Program income, rebates and refunds, and stand-in costs should be reported on the FSR on a
monthly basis. It is essential that stand-in costs be reported in the program year in which
they are earned in order to be used in lieu of any disallowed costs from that program year.
Program income, rebates and refunds, and stand-in costs should be reported on the FSR for
the reporting period in which they are earned/received/used instead of at the end of the
program year or the end of the grant period.

GDOL has developed an automated web-enabled FSR reporting system to be in compliance
with federal guidelines. To access the new system, visit http://www.dol.state.ga.us

(Workforce Professionals/More/Report WIA Financial Information).


1512 ARRA REPORTS

FEDERAL, STATE, AND LOCAL AREA REPORTING

LWIA financial management systems must provide information for any required Federal
records and reports that are uniform in definition. The application of uniform definitions of
expenditures, accrued expenditures, and obligations at the LWIA and contractor levels has
become critical since the inception of WIA. The State and USDOL are concerned that the
failure to report accruals and obligations correctly may lead to a loss of funds. Grantees and
sub-grantees must report on a monthly basis WIA/ARRA financial activity on an accrual
basis, regardless of their basis of accounting, accrual/cash/modified accrual. The objective of
this requirement is 1) to ensure that USDOL financial data presented to Congress represents
the current and accurate financial position of States and LWIAs, and 2) to ensure that data
reported by grantees represents accurate and full disclosure of the program.

GDOL is required to submit reports 9130 and ARRA Section 1512. As required by Section
1512 of the Recovery Act, the prime recipient must report sub recipient grant award and
expenditure information 10 days after the end of each calendar quarter. The prime
recipient is defined as non-Federal entities that received Recovery Act funding as Federal

29
awards in the form of grants, loans, or cooperative agreements directly from the Federal
government. A sub-recipient is defined as a non-Federal entity that expends Federal awards
received from another entity to carry out a Federal program but does not include an
individual who is a beneficiary of such a program (refer to OMB Circular A-133 for
additional information and definitions). As such, GDOL would be considered the prime
recipient and the LWIA is the sub-recipient.

To ensure a continuous submission of accurate and complete data, LWIA’s are required to
submit their ARRA Section 1512 reports to ARRA1512@dol.state.ga.us
on a monthly
basis.


GENERAL ARRA SECTION 1512 REPORTING REQUIREMENTS

Data Elements and detailed definitions for the Sub Recipient portion of the ARRA Section
1512 report are provided below. Please see Appendix H
for report illustration.
(
Source: OMB Recipient Data Model V3.0)

Sub recipient DUNS Number The sub recipient organization’s 9- digit Data
Universal Numbering System (DUNS) number.
What is a D-U-N-S number and who provides
it? Dun & Bradstreet (D&B) maintains a
business database containing information on
more than 100 million businesses worldwide.
D&B provides a D-U-N-S number, a unique 9-
digit identification number, for each physical
location of a business organization.

Subaward Number Subaward Number or Other Identifying Number
Assigned by the Recipient Entity

Sub recipient Legal Name The legal name of sub recipient as registered in
CCR or D&B

Sub recipient DBA Name The Doing-Business-As (DBA) name of sub
recipient as registered in CCR or D&B

Sub recipient Address 1
Sub recipient Address 2
Sub recipient Address 3
Sub recipient City
Sub recipient State
Sub recipient Zip+4
Sub recipient Country
Sub recipient Congressional District
Sub recipient Location. Physical location as listed
in the Central Contractor Registration.
Sub recipient Type This data element is inferred from CCR. The field
inferred is “Business Type” in CCR. What is
CCR? The Central Registration (CCR) is the
primary contractor database for the US Federal
Government. CCR collects, validates, stores and
disseminates data in support of agency
acquisition missions. (Since October 1, 2003, it is
Federally mandated that any organization
wishing to do business with the Federal
government under a Federal Acquisition
Regulation (FAR)-based contract, must be

30
registered in CCR before being awarded a
contract.) There is no cost to registrants for
registering in CCR. http://www.ccr.gov.

Amount of Subaward The anticipated total amount of funds to be
disbursed to the sub-awardee over the life of the
award.

For Federally Awarded Contracts: Total amount
of subcontract

Total Subaward Funds Disbursed
For Grants and Loans Only
Amount of Subaward Disbursed. The cumulative
amount of cash disbursed to the sub-awardee as
of the reporting period end date.

Subaward Date Subaward Date. The date the Subaward was
signed (mm/dd/yyyy).

Sub recipient Primary Place of Performance –
Street Address 1
Sub recipient Primary Place of Performance –
Street Address 2
Sub recipient Place of Performance - State
Sub recipient Place of Performance – Country
Sub recipient Place of Performance – Zip Code +
4
Sub recipient Place of Performance - City
Sub recipient Place of Performance -
Congressional District
Sub recipient Place of Performance (city, state,
congressional district, and country). The
physical location of primary place of
performance.
Sub Recipient indication of reporting applicability Names and total compensation of each of the five
most highly compensated officers of the sub
recipient for the calendar year in which the
awarded is awarded if—

(i) In the sub recipient’s preceding fiscal year, the
sub recipient received—

(A) 80 percent or more of its annual gross
revenues from Federal contracts (and
subcontracts), loans, grants (and subgrants) and
cooperative agreements; and

(B) $25,000,000 or more in annual gross
revenues from Federal contracts (and
subcontracts), loans, grants (and subgrants) and
cooperative agreements; and

(ii) The public does not have access to
information about the compensation of the senior
executives through periodic reports filed under
section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section
6104 of the Internal Revenue Code of 1986.

Sub Recipient Highly Compensated Name(5) Names of each of the five most highly
compensated officers of the sub recipient for the
calendar year in which the award is awarded if—

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(i) In the sub recipient’s preceding fiscal year, the
sub recipient received—

(A) 80 percent or more of its annual gross
revenues from Federal contracts (and
subcontracts), loans, grants (and subgrants) and
cooperative agreements; and
(B) $25,000,000 or more in annual gross
revenues from Federal contracts (and
subcontracts), loans, grants (and subgrants) and
cooperative agreements; and
(ii) The public does not have access to
information about the compensation of the senior
executives through periodic reports filed under
section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section
6104 of the Internal Revenue Code of 1986.
Sub Recipient Highly Compensated
Compensation(5)
(Conditional)
For the five most highly compensated officers of
the sub recipient: total compensation
‘‘Total compensation’’ is defined for

Federally Awarded Contracts:
FAR Clause 52.204-11

Grants and Loans:
‘‘Total compensation’’ means the cash and
noncash dollar value earned by the executive
during the sub recipient’s past fiscal year of the
following (for more information see 17 CFR
229.402(c)(2)):
(i). Salary and bonus
(ii). Awards of stock, stock options, and stock
appreciation rights. Use the dollar amount
recognized for financial statement reporting
purposes with respect to the fiscal year in
accordance with FAS 123R
(iii). Earnings for services under non-equity
incentive plans. Does not include
group life, health, hospitalization or medical
reimbursement plans that do not discriminate in
favor of executives, and are available generally to
all salaried employees
(iv). Change in pension value. This is the change
in present value of defined benefit and actuarial
pension plans
(v). Above-market earnings on deferred
compensation which are not tax-qualified
(vi). Other compensation. For example,
severance, termination payments, value of life
insurance paid on behalf of the employee,
perquisites or property if the value for the
executive exceeds $10,000

Vendor Reporting Information
Data Elements and detailed definitions for the Vendor portion of the ARRA Section 1512
report are provided below. Please see Appendix H
for report illustration.

32

NOTE:
A Vendor is defined as a dealer, distributor, merchant, or other seller providing good or
services that are required for the conduct of a Federal program. Vendors are not awarded funds by
the same means as sub-recipients and are not subject to the terms and conditions of the Federal
financial assistance award. Characteristics of a vendor include the following:
1. Provides the goods and services within normal business operations;
2. Provides similar goods or services to many different purchasers;
3. Operates in a competitive environment;
4. Provides goods or services that are ancillary to the operation of the Federal program, and
5. Is not subject to compliance requirements of the Federal program.

(Source: OMB Recipient Data Model V3.0)

VENDOR DATA ELEMENTS (All these elements are for Grants and Loans Only)

Award Number – Prime Recipient Vendor
For Grants and Loans Only:
Identifying Number Assigned by the prime
recipient.


Subaward Number – Sub-recipient Vendor
For Grants and Loans Only:
Award Number or Other Identifying Number
Assigned by the Sub-recipient

Vendor DUNS Number
For Grants and Loans Only:
Vendor DUNS Number. The vendor’s 9 digit Data
Universal Numbering System (DUNS) number

Vendor HQ Zip Code + 4
For Grants and Loans Only:
The zip code of the vendor's headquarters.

Vendor Name
For Grants and Loans Only:
The name of the vendor.

Product and Service Description
For Grants and Loans Only:
A description of the product and/or service
provided by the vendor

Payment Amount
For Grants and Loans Only:
The amount invoiced to the vendor (aggregated)
that will be paid with ARRA funds

This field is optional for vendors of sub-recipients



NOTE: MS EXCEL Sub-Recipient Report templates contain drop down boxes in headings of each
data element (cell) providing descriptions/definitions of information required. Please be sure to click
on each tab within the workbook to access each funding stream
. In addition, the OMB Recipient
Reporting Data Model V3.0 should be referenced for additional information.




33
Sub-Recipient Jobs Created/Jobs Retained Reports

OMB Updated ARRA Guidance M-10-08 dated December 18, 2009 which simplified the
formula used to calculate job estimates. Local Areas are to count wages of anyone paid
utilizing ARRA funds for the quarter. That total includes staff, youth participants and WIA
contractors if they were paid with ARRA funds with the exception of wages paid through
participation in “on-the-job-training programs”. The Jobs Created/Jobs Retained (Full Time
Equivalent FTE) report should be sent to GDOL on a quarterly (every three months) basis.
This report is due on the 20
th
of the month (or the last business day prior to the 20
th
) and
should be submitted on the same day as the monthly Vendor and Subrecipient Reports.
Therefore, it should cover all hours up to the last business day of the prior month. Please see
Appendix H
for report illustration.

GDOL Required Data Elements:
Number of Hours an Employee Worked that was charged to ARRA and will be paid
with ARRA Funds.
Descriptions of Jobs Created



TOTAL FEDERAL EXPENDITURES

Total Federal Expenditures as reported on the Financial Status Report (FSR) is the sum of
actual cash disbursements for direct charges for goods and services, the amount of indirect
expense incurred, plus the net increase or decrease in the amounts owed by the local grant
recipient for goods and other property received; for services performed by employees,
contractors, sub-grantees, and other payees, and other amounts becoming owed for which no
current services or performance is required, such as, annuities, insurance claims, and other
benefit payments. In other words, LWIAs should report the sum of their cumulative actual
cash disbursements and their accruals. Total Federal Expenditures may also be called
accrued expenditures (cash disbursements plus accruals).


CONTRACT DEOBLIGATION PROCESS

The Georgia Department of Labor requires a deobligation notice on contracts no later than 90
days after a contract ends from all LWIAs that contract with GDOL as well as all GDOL-
managed areas. The deobligation notice should be sent via email to
Renwick.Thompson@dol.state.ga.us
, GDOL Special Accounting Manager and
Suzette.Arnold@dol.state.ga.us
, GDOL Grants and Contracts Manager.







34
OVERSIGHT & MONITORING

An awarding entity may review the adequacy of the administrative and financial management
system of any grantee/sub-grantee as part of a pre-award review or any time subsequent to
the grant award. Processes and procedures should be documented in manuals or policy
directives that clearly state how the grantee/sub-grantee will adhere to the Federal/State/local
requirements.

From the beginning of WIA implementation in July 2000, the State of Georgia has worked to
ensure local Workforce Investment Boards and chief local elected officials have the
maximum flexibility allowed by Federal law and regulations in designing and implementing
workforce development systems that meet the needs of their communities.

USDOL issued 13 different sets of regulations to govern the implementation of WIA.
References for these regulations can be found at 20 CFR 667.400 and 29 CFR Parts 95 and
97. The State has developed and implemented minimal additional State policies to
supplement Federal guidance, primarily when required to do so by the law or regulations.

The State has not substituted its judgment for that of local areas, unless the matter was
primarily a State concern. Generally, if the Act or regulations do not prohibit a particular
practice, workforce areas have been encouraged to develop local policy to address issues. In