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.
WIA POLICY NUMBER:
|July 23, 2001
| POLICY | DEFINITIONS | REFERENCES
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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.
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
Allowable Prepaid Expense
Disbursement made for benefits not yet received, such as:
A two-year insurance premium should be accounted for as a prepaid
asset and it becomes expense over the life of the policy;
Non-refundable tuition prepaid would be a current expense;
A years tuition paid would be a current expense for the
non-refundable portion. The remainder would be expensed over the year, as it becomes
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.
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.
The fulfillment of an obligation is assured by security (property) given.
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
Return a previously recorded disbursement in which an over payment occurred.
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."
Payment made by cash or check.
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.
The grant recipient or other entity identified by the grant recipient, to receive WIA
funds for a WDA directly from the State.
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.
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 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.
Earnings on federal cash advanced to Fiscal Agents that are deposited in
interest-bearing accounts. Interest earned must be reported to the State.
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.
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.
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.
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
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
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:
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
Must have been reported as uncharged WIA program costs and accounted
for in the grantee/contractors financial system.
Must be adequately documented in the same manner as all other WIA
Must be from the same WIA Title cost category and funding period as
those costs which were unallowed/disallowed.
Any person, organization, or other entity, other than a WDC fiscal agent, receiving
WIA funds directly from the Governor.
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:
Determining eligibility for assistance;
Performance measured against meeting the objectives of the program;
Responsibility for programmatic decision making;
Responsibility for applicable program compliance requirements;
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
The difference between the original obligations and the reported expenditures.
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
recipients or subrecipients own use or for the use of participants in the program.
Distinguishing characteristics of a vendor include items such as:
Providing the goods and services within normal business operations;
Providing similar goods or services to many different purchasers;
Operating in a competitive environment; and
Program compliance requirements do not pertain to the goods or
The payment instrument for each invoice voucher submitted for payment.
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)
None. This communication is new.
DIRECT INQUIRIES TO
Kim Anensen, Manager
Employment Security Department
P.O. Box 9046, MS 6000
Olympia, WA 98507-9046
Telephone: (360) 902-9525
FAX: (360) 902-9520