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credits, discounts, refunds, etc. and in allowable costs to determine the net terest earned on any of them.
allowable costs. Program income shall (b) Definition of program income. be used for current costs unless the Program income means gross income Federal agency authorizes otherwise. received by the grantee or subgrantee Program income which the grantee directly generated by a grant support did not anticipate at the time of the ed activity, or earned only as a res award shall be used to reduce the Fedof the grant agreement during the eral agency and grantee contributions grant period. “During the grant rather than to increase the funds comperiod” is the time between the effec mitted to the project. tive date of the award and the ending (2) Addition. When authorized, prodate of the award reflected in the final gram income may be added to the financial report.
funds committed to the grant agree(c) Cost of generating program ment by the Federal agency and the income. If authorized by Federal regu
grantee. The program income shall be lations or the grant agreement, costs
used for the purposes and under the incident to the generation of program conditions of the grant agreement. income may be deducted from gross
(3) Cost sharing or matching. When income to determine program income.
authorized, program income may be (d) Governmental revenues. Taxes,
used to meet the cost sharing or special assessments, levies, fines, and
matching requirement of the grant other such revenues raised by a grant
agreement. The amount of the Federal ee or subgrantee are not program
grant award remains the same. income unless the revenues are specifi
(h) Income after the award period. cally identified in the grant agreement
There are no Federal requirements or Federal agency regulations as pro
governing the disposition of program gram income. (e) Royalties. Income from royalties
income earned after the end of the and license fees for copyrighted mate
award period (i.e., until the ending rial, patents, and inventions developed
date of the final financial report, see by a grantee or subgrantee is program
paragraph (a) of this section), unless income only if the revenues are specif
the terms of the agreement or the ically identified in the grant agree
Federal agency regulations provide
otherwise. ment or Federal agency regulations as program income. (See § 1174.34.)
8 1174.26 Non-Federal audit. (f) Property. Proceeds from the sale of real property or equipment will be
(a) Basic rule. Grantees and subhandled in accordance with the re grantees are responsible for obtaining quirements of $$ 1174.31 and 1174.32. audits in accordance with the Single
(g) Use of program income. Program Audit Act of 1984 (31 U.S.C. 7501-7) income shall be deducted from outlays and Federal agency implementing regwhich may be both Federal and non ulations. The audits shall be made by Federal as described below, unless the an independent auditor in accordance Federal agency regulations or the with generally accepted government grant agreement specify another alter auditing standards covering financial native (or a combination of the alter and compliance audits. natives). In specifying alternatives, the (b) Subgrantees. State or local govFederal agency may distinguish be ernments, as those terms are defined tween income earned by the grantee for purposes of the Single Audit Act, and income earned by subgrantees and that receive Federal financial assistbetween the sources, kinds, ance and provide $25,000 or more of it amounts of income. When Federal in a fiscal year to a subgrantee shall: agencies authorize the alternatives in (1) Determine whether State or local paragraphs (g) (2) and (3) of this sec subgrantees have met the audit retion, program income in excess of any quirements of the Act and whether limits stipulated shall also be deducted subgrantees covered by OMB Circular from outlays.
A-110, “Uniform Requirements for (1) Deduction. Ordinarily program Grants and Other Agreements with income shall be deducted from total Institutions of Higher Education, Hos
governmental organizations (except ito, cons
burdensome application requirements
(b) Authorized forms and instruc tions for governmental organizations. (1) In applying for grants, applicants
nder the pas
(10) Payments under the Veterans
or use sta Administration's State Home Per
?r those p Diem Program (38 U.S.C. 641(a)). Agency wil
(b) Entitlement programs. Entitlement programs enumerated above in i. $ 1174.4(a) (3) through (8) are subject aplicants ar
Dore than te to Subpart E.
structions a numbers percily and
a finctions, 0 20 plan, bz
not under &
8 1174.5 Effect on other issuances.
All other grants administration pro-
(a) For classes of grants and grant-
(b) Exceptions for classes of grants
s required up tion Act of I, except te Agencies E
the applica a that is no
Then a gran
(ii) Child Support Enforcement and Establishment of Paternity (Title IVD of the Act);
(iii) Foster Care and Adoption Assistance (Title IV-E of the Act);
(iv) Aid to the Aged, Blind, and Disabled (Titles I, X, XIV, and XVIAABD of the Act); and
(v) Medical Assistance (Medicaid) (Title XIX of the Act) not including the State Medicaid Fraud Control program authorized by section 1903(a)(6)(B).
(4) Entitlement grants under the following programs of The National School Lunch Act:
(i) School Lunch (section 4 of the Act),
(ii) Commodity Assistance (section 6 of the Act),
(iii) Special Meal Assistance (section 11 of the Act),
(iv) Summer Food Service for Children (section 13 of the Act), and
(v) Child Care Food Program (section 17 of the Act).
(5) Entitlement grants under the following programs of The Child Nutrition Act of 1966:
(i) Special Milk (section 3 of the Act), and
(ii) School Breakfast (section 4 of the Act).
(6) Entitlement grants for State Administrative expenses under The Food Stamp Act of 1977 (section 16 of the Act).
(7) A grant for an experimental, pilot, or demonstration project that is also supported by a grant listed in paragraph (a)(3) of this section;
(8) Grant funds awarded under subsection 412(e) of the Immigration and Nationality Act (8 U.S.C. 1522(e)) and subsection 501(a) of the Refugee Education Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 1809), for cash assistance, medical assistance, and supplemental security income benefits to refugees and entrants and the administrative costs of providing the assistance and benefits;
(9) Grants to local education agencies under 20 U.S.C. 236 through 2411(a), and 242 through 244 (portions of the Impact Aid program), except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for Handicapped Children); and
Adinding (su momental may submit
that is stil thed.
Subpart B-Pre-Award Requirements
(a) Scope. (1) This section prescribes
Intergove si Program
hospitals and institutions of higher
(2) This section applies only to appli-
, and is not required to be applied by grantees in dealing with applicants for subgrants. However, grantees are en. couraged to avoid more detailed or
nly use standard application or those prescribed by the agency with the approval of der the Paperwork Reduction 980. Oplicants are not required to nore than the original and two of preapplications or applica
(1) Cite by number the statutory or regulatory provisions requiring the assurances and affirm that it gives the assurances required by those provisions,
(2) Repeat the assurance language in the statutes or regulations, or
(3) Develop its own language to the extent permitted by law.
(d) Amendments. A State will amend a plan whenever necessary to reflect: (1) New or revised Federal statutes or regulations or (2) a material change in any State law, organization, policy, or State agency operation. The State will obtain approval for the amendment and its effective date but need submit for approval only the amended portions of the plan.
plicants must follow all appliastructions that bear OMB e numbers. Federal agencies ecify and describe the prounctions, or activities that will to plan, budget, and evaluate k under a grant. Other supple
instructions may be issued h the approval of OMB to the equired under the Paperwork on Act of 1980. For any stand1, except the SF-424 facesheet, agencies may shade out or inhe applicant to disregard any I that is not needed. ten a grantee applies for addiinding (such as a continuation emental award) or amends a ly submitted application, only cted pages need be submitted. ly submitted pages with inforhat is still current need not be ted.
State plans. ipe. The statutes for some proequire States to submit plans eceiving grants. Under regulaaplementing Executive Order Intergovernmental Review of Programs,” States are allowed ify, consolidate and substitute his section contains additional is for plans that are subject to ons implementing the Execur. quirements. A State need meet deral administrative or protic requirements for a plan in statutes or codified regula
8 1174.12 Special grant or subgrant condi
tions for “high-risk” grantees. (a) A grantee or subgrantee may be considered “high risk” if an awarding agency determines that a grantee or subgrantee:
(1) Has a history of unsatisfactory performance, or
(2) Is not financially stable, or
(3) Has a management system which does not meet the management standards set forth in this part, or
(4) Has not conformed to terms and conditions of previous awards, or
(5) Is otherwise not responsible; and if the awarding agency determines that an award will be made, special conditions and/or restrictions shall correspond to the high risk condition and shall be included in the award.
(b) Special conditions or restrictions may include:
(1) Payment on a reimbursement basis;
(2) Withholding authority to proceed to the next phase until receipt of evidence of acceptable performance within a given funding period;
(3) Requiring additional, more detailed financial reports;
(4) Additional project monitoring;
(5) Requiring the grante or subgrantee to obtain technical or management assistance; or
(6) Establishing additional prior approvals.
(c) If an awarding agency decides to impose such conditions, the awarding
surances. In each plan the ill include an assurance that e shall comply with all appli:deral statutes and regulations t with respect to the periods ch it receives grant funding. S assurance and other assurquired in the plan, the State
making any fund or budget transfer
approval unless waived by the award. § 1174.30
pitals and Other Nonprofit Organiza subgrants even if paragraphs (c) tions" have met the audit require through (f) of this section do not. ment. Commercial contractors (private (c) Budget changes—(1) Nonconforprofit and private and governmen struction projects. Except as stated in tal organizations, providing goods and other regulations or an award docuservices to State and local govern ment, grantees or subgrantees shall ments are not required to have a obtain the prior approval of the single audit performed. State and local awarding agency whenever any of the govenments should use their own pro following changes is anticipated under cedures to ensure that the contractor
a nonconstruction award: has complied with laws and regula
(i) Any revision which would result tions affecting the expenditure of Fed
in the need for additional funding. eral funds;
(ii) Unless waived by the awarding (2) Determine whether the subgran
agency, cumulative transfers among tee spent Federal assistance funds pro
direct cost categories, or, if applicable, vided in accordance with applicable laws and regulations. This may be ac
among separately budgeted programs,
projects, functions, or activities which complished by reviewing an audit of the subgrantee made in accordance
exceed or are expected to exceed ten with the Act, Circular A-110,
percent of the current total approved
budget, whenever the awarding agenthrough other means (e.g., program
cy's share exceeds $100,000. reviews) if the subgrantee has not had such an audit;
(iii) Transfer of funds allotted for (3) Ensure that appropriate correc
training allowances (i.e., from direct tive action is taken within six months
payments to trainees to other expense after receipt of the audit report in in
categories). stance of noncompliance with Federal
(2) Construction projects. Grantees laws and regulations;
and subgrantees shall obtain prior (4) Consider whether subgrantee
written approval for any budget revi. audits necessitate adjustment of the
sion which would result in the need grantee's own records; and
for additional funds. (5) Require each subgrantee to
(3) Combined construction and nonpermit independent auditors to have
construction projects. When a grant or access to the records and financial
subgrant provides funding for both statements.
construction and nonconstruction ac(c) Auditor selection. In arranging
tivities, the grantee or subgrantee for audit services, s 1174.36 shall be
must obtain prior written approval followed.
from the awarding agency before CHANGES, PROPERTY, AND SUBAWARDS 8 1174.30 Changes.
(a) General. Grantees and subgrantees are permitted to rebudget within the approved direct cost budget to meet unanticipated requirements and may make limited program changes to the approved project. However, unless waived by the awarding agency, certain types of post-award changes in budgets and projects shall require the prior written approval of the awarding agency.
(b) Relation to cost principles. The applicable cost principles (see § 1174.22) contain requirements for prior approval of certain types of costs. Except where waived, those requirements apply to all grants and ing agency.
from nonconstruction to construction
(d) Programmatic changes. Grantees or subgrantees must obtain the prior approval of the awarding agency whenever any of the following actions is anticipated:
(1) Any revision of the scope or objectives of the project (regardless of whether there is an associated budget revision requiring prior approval).
(2) Need to extend the period of availability of funds.
(3) Changes in key persons in cases where specified in an application or & grant award. In research projects, & change in the project director or principal investigator shall always require
(4) Under nonconstruction projects, contracting out, subgranting (if authorized by law) or otherwise obtaining the services of a third party to perform activities which are central to the purposes of the award. This approval requirement is in addition to the approval requirements of g 1174.36 but does not apply to the procurement of equipment, supplies, and general support services.
(e) Additional prior approval requirements. The awarding agency may not require prior approval for any budget revision which is not described in paragraph (c) of this section.
(f) Requesting prior approval. (1) A request for prior approval of any budget revision will be in the same hudget formal the grantee used in its application and shall be accompanied by a narrative justification for the proposed revision.
(2) A request for a prior approval under the applicable Federal cost principles (see § 1174.22) may be made by letter.
(3) A request by a subgrantee for prior approval will be addressed in writing to the grantee. The grantee will promptly review such request and shall approve or disapprove the request in writing. A grantee will not approve any budget or project revision which is inconsistent with the purpose or terms and conditions of the Federal grant to the grantee. If the revision, requested by the subgrantee would result in a change to the grantee's approved project which requires Federal prior approval, the grantee will obtain the Federal agency's approval before approving the subgrantee's request. 8 1174.31 Real property.
(a) Title. Subject to the obligations and conditions set forth in this section, title to real property acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.
(b) Use. Except as otherwise provided by Federal statutes, real property will be used for the originally authorized purposes as long as needed for that purposes, and the grantee or subgrantee shall not dispose of or encumber its title or other interests.
(c) Disposition. When real property is no longer needed for the originally authorized purpose, the grantee or subgrantee will request disposition instructions from the awarding agency. The instructions will provide for one of the following alternatives:
(1) Retention of title. Retain title after compensating the awarding agency. The amount paid to the awarding agency will be computed by applying the awarding agency's percentage of participation in the cost of the original purchase to the fair market value of the property. However, in those situations where a grantee or subgrantee is disposing of real property acquired with grant funds and acquiring replacement real property under the same program, the net proceeds from the disposition may be used as an offset to the cost of the replacement property.
(2) Sale of property. Sell the property and compensate the awarding agency. The amount due to the awarding agency will be calculated by apply. ing the awarding agency's percentage of participation in the cost of the original purchase to the proceeds of the sale after deduction of any actual and reasonable selling and fixing-up expenses. If the grant is still active, the net proceeds from sale may be offset against the original cost of the property. When a grantee or subgrantee is directed to sell property, sales procedures shall be followed that provide for competition to the extent practicable and result in the highest possible return.
(3) Transfer of title. Transfer title to the awarding agency or to a thirdparty designated/approved by the awarding agency. The grantee or subgrantee shall be paid an amount calculated by applying the grantee or subgrantee's percentage of participation in the purchase of the real property to the current fair market value of the property.
8 1174.32 Equipment.
(a) Title. Subject to the obligations and conditions set forth in this section, title to equipment acquired under a grant or subgrant will vest upon ac