Workforce Investment Act Title I-B
Washington State Policies


SECTION B: Fiscal Controls and Accounting Guidelines

Grantees, subrecipients, and contractors funded under the Workforce Investment Act, (WIA) whether in whole or in part, must abide by the Workforce Investment Act of 1998, the WIA Regulations, all applicable Office of Management and Budget (OMB) circulars, state regulations in laws and rules (Revised Code of Washington and Washington Administrative Code), Office of Financial Management (OFM) policies, and the Washington State WIA policies.

EFFECTIVE DATE:
WIA POLICY NUMBER:
SUBJECT:
July 23, 2001
3200
Fiscal Definitions

BACKGROUND | POLICY | DEFINITIONS | REFERENCES
SUPERSEDES
| WEBSITE | INQUIRIES

BACKGROUND

None.

POLICY

None.

DEFINITIONS

Accrual Basis
Methods of accounting whereby financial transactions for a specific period of time are recorded as incurred without regard to the date of receipt or disbursement.

Accrued Expenditures
A liability account reflecting expenses incurred but not due until a later date.

Administrative Cost Pool
Administrative funds from all Workforce Investment Act (WIA) sources contained in a single grant or "pool". Such funds lose identity with regard to the original fund source.

Allowable Prepaid Expense
Disbursement made for benefits not yet received, such as:

  1. A two-year insurance premium should be accounted for as a prepaid asset and it becomes expense over the life of the policy;

  2. Non-refundable tuition prepaid would be a current expense;

  3. A year’s tuition paid would be a current expense for the non-refundable portion. The remainder would be expensed over the year, as it becomes non-refundable; and

  4. Payment for equipment which has been shipped and to which title has passed to the buyer is considered an expense at the time. Governmental accounting does not usually use depreciation as a method of spreading costs over the useful life of the equipment. Magazine subscriptions are expensed when paid. This is an immaterial item and would not be in the prepaid category.

Cognizant Agency
The "Cognizant Agency" usually refers to that federal agency which contributes the largest share of the federal funds to the auditee. It may be that federal agency which has approved a cost allocation plan or an indirect cost rate, or that federal agency agreeing to become the cognizant agency for the subrecipient.

Collaterally Secured
The fulfillment of an obligation is assured by security (property) given.

Contract/Agreement
A procurement instrument by which the fiscal agent, service provider, or subrecipient is committed to pay for goods, property, or services needed to accomplish the purposes of the contract/agreement.

Credit
Return a previously recorded disbursement in which an over payment occurred.

Direct Credit
Direct Credit refers to the costs that can be specifically identified with particular projects, activities, or objectives. Detailed definitions of direct cost are found in the applicable "cost principles."

Disbursements
Payment made by cash or check.

Expenditures
Where the accounts are kept on the accrual basis or modified accrual basis this term designates the cost of goods delivered or services rendered, whether paid or unpaid.

Fiscal Agent
The grant recipient or other entity identified by the grant recipient, to receive WIA funds for a WDA directly from the State.

Forecast
To estimate or calculate in advance future monthly cash/expenditure activities grant agreement: The document that establishes a binding legal relationship between the state and Workforce Development Area (WDA) fiscal agent to carry out an approved project.

Grant Recipient
Chief Elected Officials (CEO) of a specific geographic area designated as a Workforce Investment Area by the Governor are defined in Workforce Investment Act as the grant recipient for that area. (See Section 117 (d)(B) of the Federal Register.)

Indirect Cost
Indirect costs are allowable costs incurred for a common or joint purpose and cannot be readily identified with a particular cost objective; therefore, some method of allocation must be used to distribute the indirect costs to various direct activities that were benefited. Indirect cost must be distributed equitably and consistently. A test to determine if service directly benefited participants should be met for costs to be charged to the WIA cost objective/category. Documentation of such charges shall be maintained to provide proof of the validity of the allocation.

The costs incurred for the mutual benefit of several fund sources, objectives, activities, or projects, and not specifically identifiable with a singular end product or service.

Interest Earned
Earnings on federal cash advanced to Fiscal Agents that are deposited in interest-bearing accounts. Interest earned must be reported to the State.

Internal/External Audits
Internal auditing is a function within an organization for the review of financial operations as a service to management. External audits are those conducted by auditors who are independent, both in fact and in appearance, for the organization being audited.

Journal Voucher
For purposes of this policy, a document provided for recording the transfer of funds between state agencies.

Minimum Cash Balance
The cash on hand to meet immediate cash needs.

Obligation
The amount of orders placed, contracts, and subgrants awarded, goods and services received, similar transactions and items specified on an obligation record during a funding period that will require payment during the same or future period.

Program Income
Earning realized from grant-supported activities. Such earnings include interest income, and may include, but will not be limited to, income from service and conference fees, commodity sales and rental fees.

Program income shall also include earnings which are in excess of costs and which are realized by public agencies or by private non-profit organizations from contracts which are reimbursable awards. Program income shall be used to pay for allowable WIA activities.

Service Provider
An organization, entity, or individual under contract, whether sole source or competitively bid, to provide WIA administrative or program services.

Settlement of Grants or Contracts
The process by which the state grantee obtains a final accounting of the grant or contract.

Stand-In Costs
Stand-in costs can be substituted for otherwise unallowable costs charged to WIA. The requirements to be considered as potential "stand-in" costs are shown below:

  1. Must be allowable WIA costs that were actually incurred but not charged to the WIA program because of funding limitations, local division, or any other reasons.

  2. Must have been reported as uncharged WIA program costs and accounted for in the grantee/contractors financial system.

  3. Must be adequately documented in the same manner as all other WIA program costs.

  4. Must be from the same WIA Title cost category and funding period as those costs which were unallowed/disallowed.

State Subrecipient
Any person, organization, or other entity, other than a WDC fiscal agent, receiving WIA funds directly from the Governor.

Subrecipient
An entity that receives federal assistance passed through from a prime recipient or another subrecipients to carry out or administer a WIA program. Distinguishing characteristics of a subrecipient include items such as:

  1. Determining eligibility for assistance;

  2. Performance measured against meeting the objectives of the program;

  3. Responsibility for programmatic decision making;

  4. Responsibility for applicable program compliance requirements;

  5. Use of the funds passed through to carry out a program of the sub-entity as compared to providing goods or services for a program of the prime recipient.

Unliquidated Obligations
The difference between the original obligations and the reported expenditures.

Vendor
An entity responsible for providing generally required goods or services related to the administrative support of the feral award. These goods or services may be for the recipient’s or subrecipients own use or for the use of participants in the program. Distinguishing characteristics of a vendor include items such as:

  1. Providing the goods and services within normal business operations;

  2. Providing similar goods or services to many different purchasers;

  3. Operating in a competitive environment; and

  4. Program compliance requirements do not pertain to the goods or services provided.

Warrant
The payment instrument for each invoice voucher submitted for payment.

REFERENCES

All fiscal policies and guidance letters published for WIA are governed, as appropriate, under:

  • Public Law 105-200

  • 20 CFR Part 652

  • OMB Circular A-122: Cost Principles for Non Profits

  • OMB Circular A-133: Audit of State and Local Government

  • OMB Circular A-133: Compliance Supplement

  • OMB Circular A-21: Cost Principles for Education Institutions

  • OMB Circular A-87: Revised Cost Principles for State and Local Government and Indian Tribal Government

  • Federal Register Vol. 65, No. 124, Resource Sharing for Workforce Investment Act One-Stop Centers; and

  • Generally Accepted Accounting Procedures (GAAP)

SUPERSEDES

None. This communication is new.

WEBSITE

http://www.wa.gov/esd/policies/title1b.htm

DIRECT INQUIRIES TO

Kim Anensen, Manager
Employment Security Department
P.O. Box 9046, MS 6000
Olympia, WA 98507-9046
E-Mail:
kanensen@esd.wa.gov
Telephone: (360) 902-9525
FAX: (360) 902-9520

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