Iowa Administrative Code › Agency 877 - Workforce Development Board and Workforce Development Center Administration Division › Chapter 7 - Iowa Workforce Investment Act Program › Rule 877-7.17 - Financial Management

Current through Register Vol. 47, No. 3, July 24, 2024
Allowable costs shall be determined in accordance with the
				Office of Management and Budget (OMB) circulars applicable to the various
				entities receiving grant funds from the department. Nothing in this rule shall
				supersede the requirements placed on each entity as promulgated by the
				applicable OMB circular including factors which affect allowability of costs,
				reasonable costs, allocable costs, applicable credits, direct costs, indirect
				or facility and administrative costs, allowable costs as defined in "selected
				items of costs," in accordance with the appropriate OMB circular.
Additional regulations applicable to contractors are found in
				29 CFR Part 97 for State and Local Governments and Part 95 for Institutions of
				Higher Education, Hospitals and other Non-Profit Organizations. Exceptions to
				those regulations are that:
1.
			 Procurement contracts and other transactions between local boards and units of
			 state and local governments must be conducted only on a cost reimbursement
			 basis.
2. Program income shall be
			 calculated based on the methods outlined in 7.17(2).
3. Any excess revenue over expenditures
			 incurred for services provided by a governmental unit or nonprofit must be
			 considered program income.
(1) General
			 requirements of a financial management system. Financial management systems
			 should provide fiscal controls and accounting procedures that conform to
			 generally accepted accounting principles (GAAP) as they relate to programs
			 administered. A financial management system must also have certain procedures
			 in place to ensure that the system meets the requirements of state and federal
			 laws and regulations.
(2) Program
			 income means income generated by a program-supported activity or earned only as
			 a result of the contract.
a. Program income
			 includes:
(1) Income from fees for services
			 performed and from conferences;
(2)
			 Income from the use or rental of property acquired with contract
			 funds;
(3) Income from the sale of
			 commodities or items fabricated under a contract;
(4) Income generated due to revenue in excess
			 of expenditures for services rendered, when provided by a governmental unit or
			 nonprofit entity.
b.
			 Program income does not include:
(1) Interest
			 earned on grant funds, rebates, credits, discounts, refunds, or any interest
			 earned on any of them. (Such funds shall be credited as a reduction of costs if
			 received during the same funding period. Any credits received after the funding
			 period must be returned to the department.);
(2) Taxes, special assessments, levies,
			 fines, and other governmental revenues raised by a contractor;
(3) Income from royalties and license fees,
			 copyrighted material, patents, patent applications, trademarks, and inventions
			 developed by a contractor;
(4) Any
			 other refunds or reimbursements, such as Pell Grant reimbursement. (Such funds
			 shall be credited back to the program that incurred the original
			 costs.);
(5) Any other funds
			 received as the result of the sale of equipment. (Such funds shall be credited
			 back to the program that incurred the original costs.)
c. Costs incidental to the generation of
			 program income must be deducted, if not already charged to the grant, from
			 gross program income to determine net program income. Net program income earned
			 may be retained and not sent back to the department, if such income is added to
			 the funds committed to the particular program under which it was earned. Net
			 program income must be used for allowable program purposes, and under the terms
			 and conditions applicable to the use of that program's funds. Program income
			 generated may be used for any allowable activity under the program that
			 generated that income.
d. All net
			 program income generated and expended must be reported to the department each
			 month on the financial status report. Documentation of the use of net program
			 income must be maintained on file. Any net program income not used in
			 accordance with the requirements of this rule must be returned to the
			 department.
(1) The classification of costs,
			 including cost limitations, apply to net program income. Net program income
			 must be disbursed prior to requesting additional cash payments. Net program
			 income not disbursed prior to the submittal of the annual closeout reports must
			 be returned to the department.
(2)
			 If the net program income cannot be used by the region that generated such
			 income for allowable purposes, the funds must be returned to the department.
			 The department may permit another region to use the net program income for
			 allowable purposes.
(3) Working
			 capital advance payments of federal funds.
a.
			 Reimbursement is the preferred method for payment. However, the subrecipient
			 may provide working capital advance payments of federal funds only to
			 contractors, not vendors or training providers, after determining that:
(1) Reimbursement is not feasible because the
			 contractor lacks sufficient working capital;
(2) The contractor meets the standards of
			 this rule governing advances to contractor;
(3) Advance payment is in the best interest
			 of the grantee or subrecipient; and
(4) The reason for needing an advance is not
			 the unwillingness or inability of the grantee or subrecipient to provide timely
			 reimbursements to meet the contractor's actual cash disbursements.
b. If the conditions in 7.17(3)
			 "a" are met, working capital advance payments may be made to contractors by use
			 of one of the two procedures outlined below:
(1) Cash is only advanced (through check or
			 warrant) to the contractor to cover its estimated disbursement needs for an
			 initial period, generally geared to the contractor's disbursement cycle, but in
			 no event may the advance exceed 20 percent of the contract amount. After the
			 initial advance, the contractor is only reimbursed for its actual cash
			 disbursements; or
(2) Cash is
			 advanced electronically on a weekly basis similar to the system maintained
			 between the department and its contractors. Drawdowns and expenditures must be
			 timed in away that minimizes the delay between the receipt and actual
			 disbursement of those funds.
(4)
			 Cost allocation. The methods of cost allocation identified in this subrule are
			 not all inclusive. Any method chosen must be consistent with cost allocation
			 principles as defined in the OMB circular applicable to the contractor.
a. Any single cost which is properly
			 chargeable to more than one program or cost category is allocated among the
			 appropriate programs and cost categories based on the benefits derived.
			 Contractors that receive WIA funds are required to maintain a written cost
			 allocation for WIA expenditures. A cost allocation plan is the means by which
			 costs related to more than one program or cost category are distributed
			 appropriately. All costs included in a cost allocation plan must be supported
			 by formal accounting records that substantiate the propriety of eventual
			 charges. Each subrecipient must develop a written plan that addresses how joint
			 costs will be allocated during the fiscal year. The plan must include:
(1) The time period involved;
(2) Programs that must be
			 allocated;
(3) Basis to be used for
			 allocation; and
(4) Exceptions to
			 the general rules.
Any cost that cannot be identified as a direct cost of a
				particular program or a cost category is allocated based on one of the
				acceptable methods discussed above and must be included in the cost allocation
				plan.
b. Cost
			 allocation plans are based on a documented basis. The basis upon which a given
			 cost is allocated is relevant to the nature of the cost being allocated, and
			 whether the cost is a legitimate charge to the program(s) and cost category to
			 which it is being allocated. The basis upon which costs are allocated is
			 consistent throughout the fiscal year.
c. Possible acceptable actual bases for
			 allocating costs include:
(1) Staff timesheet
			 allocation basis (fixed or variable).
(2) Service level allocation basis (fixed or
			 variable).
(3) Usage rate
			 allocation basis (fixed or variable).
(4) Full-time employees basis (fixed
			 only).
d. Funds received
			 under various programs may be allocated using the cost pooling method. Under a
			 cost pooling method, expenditures that cannot be identified to a particular
			 cost category or program may be pooled and allocated in total on a monthly
			 basis. If this method is established, the expenditures must be allocated to
			 each program based upon the benefit derived by each program. Cost pools may be
			 established for a cost category, a line item in an agency's budget or to
			 include multiple programs. The process used to allocate pool costs must ensure
			 that no program or cost category is charged an amount in excess of what is
			 allowed by law or regulation. Examples include:
(1) Administrative, program services or
			 combined cost category pool. (An administrative pool may be used if an entity
			 also has administrative costs associated with programs other than WIA Title I
			 programs.)
(2) Facility or supplies
			 line item cost pool.
(3) Workforce
			 (multiple) programs.
e.
			 Cost allocation plans must be submitted by August 31 of each year to Bureau of
			 Administrative Support, Budgeting and Reporting, Department of Workforce
			 Development, 1000 E. Grand Avenue, Des Moines, Iowa 50319.
(5) Indirect costs may be charged to
			 programs, if the contractor has an approved indirect cost agreement with a
			 federal cognizant agency or another state agency and the agreement covers the
			 term of the grant. The plan must be in compliance with the applicable OMB
			 circular for the entity charging indirect costs.
(6) Time and attendance documentation must be
			 maintained for any individual who receives any part of the individual's wage
			 from programs funded by WIA and for all participants receiving payments based
			 in whole or in part on attendance in programs funded by WIA.
(7) A contractor receiving federal or state
			 funds from the department and conducting its own procurement must have written
			 procurement procedures. The procedures must be consistent with applicable state
			 and local laws and regulations; the procurement standards set forth in this
			 subrule; and the regulations as described in 29 CFR Part 95 for institutions of
			 higher education and nonprofit organizations; or 29 CFR Part 97 for state and
			 local government organizations.
a. State and
			 federal procurement laws and regulations, including the procurement standards
			 set forth in this subrule, take precedence over any contractor procurement
			 policies and procedures.
b. The
			 written procurement policies and procedures of each contractor must include, at
			 a minimum, the following elements:
(1)
			 Authority to take procurement actions;
(2) Standards of conduct;
(3) Methods of procurement;
(4) Solicitation procedures; and
(5) Documentation requirements.
c. There are three types of
			 allowable procurement procedures: request for quotations (RFQ), request for
			 proposals (RFP), and sole source. Contractors must conduct competitive
			 procurement except as outlined in
"d"
below.
d. The circumstances or situations under
			 which sole source procurement is allowable are limited to the following:
(1) Any single purchase of supplies,
			 equipment, or services totaling less than $2,000 in the aggregate;
(2) Single participant work experience,
			 vocational exploration, limited internship and on-the-job training
			 contracts;
(3) Enrollment of
			 individual participants in institutional skills training;
(4) All other individual training or services
			 contracts involving only one participant, except where such contracts include
			 the purchase of property. Such property must be purchased through competitive
			 procedures;
(5) Activities and
			 services that are provided by the fiscal agent, designated service provider, or
			 subrecipient when a determination of demonstrated performance clearly documents
			 the staff's ability to provide the training or services;
(6) A modification to a contract that does
			 not substantially change the statement of work of that contract;
(7) After solicitation of an adequate number
			 of sources, only one acceptable response was received;
(8) Any single service or workshop costing
			 less than $5,000 identified in the regional customer service plan;
(9) Supplies, property and services which
			 have been determined to be available from a single source; and
(10) An emergency situation for which the
			 department or applicable governing boards provide written approval.
(8) Property purchased
			 with funds received through the department must be acquired in accordance with
			 the department standards.
a. Prior approval
			 must be obtained from the department before purchasing any property with a unit
			 acquisition value of $5,000 or more.
b. Real property (real estate and land) shall
			 not be purchased with funds received through the department.
c. Title to all property purchased with the
			 department funds, including participant property, is vested with the state if
			 the state is the majority owner. (If more than one agency contributed funds for
			 the purchase of property, the majority owner is the entity that provided the
			 largest portion of funds. In instances in which entities contributed the same
			 amount of funding, the state is considered the majority owner.)
d. Prenumbered department property tags shall
			 be affixed to all property with a unit acquisition value of $2,000 or more, and
			 to all personal computer logic units and monitors. Unnumbered department
			 property tags shall be affixed to all property with an aggregate value of
			 $2,000 or more at time of purchase. Prenumbered and unnumbered tags will be
			 provided to each region.
e. At a
			 minimum, an inventory of all property must include the following:
1. Property tag number, if
			 applicable;
2. Description of the
			 property;
3. Stock or
			 identification number, including model and manufacturer's serial number, when
			 applicable;
4.
			 Manufacturer;
5. Purchase
			 date;
6. Purchase order number,
			 when applicable;
7. Unit
			 cost;
8. Location of
			 property;
9. Condition of
			 property;
10. Disposition of
			 property as applicable; and
11.
			 Grant agreement number.
f.A physical observation of all property must
			 be conducted by the program operator prior to the end of each fiscal year (June
			 30). A complete inventory list must be provided to the department in each
			 fiscal year's close-out package.
g.
			 All property purchased with the department funds or transferred from programs
			 under the authority of the department must be used to meet program objectives
			 and the needs and priorities identified in the regional customer service plan.
			 Property purchased with the department funds must be used by the coordinating
			 service provider or program operator in the program or project for which it was
			 acquired, as long as it is needed for that project or program. When no longer
			 needed for the original program or project, the property may be used in other
			 activities supported by the department.
h. The department-purchased property may be
			 made available for use on other projects or programs providing such use does
			 not interfere with the work on the project or program for which it was
			 originally acquired. Priority should be given to other programs or projects
			 supported by the department.
i.
			 Disposition of any property, including participant property, is allowable only
			 with the written concurrence of the department. The request to dispose of
			 property must be in writing and include:
1. A
			 description of the property;
2. Its
			 purchase price;
3. Property tag
			 number;
4. Current condition;
			 and
5. Preference for the method of
			 disposal.
j. The method
			 of disposal may be the outright disposal by local waste agencies of items that
			 are either unusable or unsafe or are currently of immaterial value. Those items
			 that do not fit this definition may be sold locally, using a public process, to
			 generate program income.
k.
			 Requests to dispose of property are to be sent to Business Management,
			 Department of Workforce Development, 1000 E. Grand Avenue, Des Moines, Iowa
			 50319.
l.Any funds generated from
			 sale of property are to be considered program income and must be used to
			 further the objectives of the program(s) that paid for that property
			 originally. If that funding source no longer exists, then the program income
			 generated must be used for other allowable employment or training activities.
			 In cases where the property was purchased from multiple funding sources, the
			 program income generated may be attributed to the funding source that paid the
			 greatest share of the cost of the property. Otherwise, the program income must
			 be allocated by the same percentages as were used to purchase the property
			 originally.
(9)
			 Certifications. All contractors must certify, as a condition to receive
			 funding, compliance with the following laws and implementing regulations:
a. Workforce Investment Act of 1998 (P. L.
			 105-220) and all subsequent amendments.
b.
U.S. Department of Labor implementing
				regulations.
c. Iowa Code
			 chapters 84, 84A, and 96.
d. Iowa
			 Administrative Code 877-Chapter 11.
e. Iowa Civil Rights Act of 1965.
f. OMB Circular A-87 for State and Local
			 Governments.
g. OMB Circular A-122
			 for Non-Profit Entities.
h. OMB
			 Circular A-21 for Institutions of Higher Education.
i. Appendix E of 45 CFR Part 74 for hospitals
			 receiving research and development grants.
j. 29 CFR Part 97 for State and Local
			 Governments.
k. 29 CFR Part 95 for
			 Institutions of Higher Education, Hospitals and other Non-Profit
			 Organizations.
l. Age
			 Discrimination Act of 1975 (
			 42 U.S.C.
			 6101 et seq.).
m. Section 504 of the Rehabilitation Act of
			 1973 (
			 29 U.S.C.
			 794) .
n. Americans with Disabilities Act of
			 1990.
o. Title IX of the Education
			 Amendments of 1972 (
			 20 U.S.C.
			 1681 et seq.).
p. Title VI of the Civil Rights Act of 1964 (
			 42 U.S.C. 2000 d et seq.).
q.
			 Debarment and suspension; restrictions on lobbying ( 29 CFR Part 93
			).
r. Drug-Free Workplace ( 29 CFR
			 Part 98).
s. Other relevant
			 regulations as noted in the department's handbook for grantees and contracts
			 for services with the department.
(10) Unallowable costs. WIA funds shall not
			 be spent on the following:
a. Wages of
			 incumbent employees during their participation in economic development
			 activities provided through a statewide workforce investment system.
b. Expenses prohibited under any other
			 federal, state or local law or regulation.
c. Foreign travel, if the source of funds is
			 formula funds under Subtitle B, Title I of WIA.
d. Financial assistance for any program
			 involving political activities.
e.
			 The encouragement of a business to relocate from any location in the United
			 States if the relocation results in any employees losing their jobs at the
			 original location.
f.Customized,
			 skill, or on-the-job training or company-specific assessments of job applicants
			 or employees of a business that has relocated from any location in the United
			 States, until the company has operated at that location for 120 days, if the
			 relocation has resulted in any employees losing their jobs at the original
			 location.
g. Any region may enter
			 into an agreement with another region within the same labor market to pay or
			 share costs of program services, including supportive services. The agreement
			 must be approved by each regional board providing guidance to the area and
			 shall be described in the regional customer service plan.
h. WIA funds cannot be used for public
			 service employment except for disaster relief employment.
i. Fees may not be charged for placement or
			 referral to a WIA activity. However, services, facilities, or equipment funded
			 under the WIA may be used on a fee-for-service basis by employers in a region
			 in order to provide employment and training activities to incumbent workers
			 when such services, facilities, or equipment is not in use to provide services
			 for WIA participants; if such use for incumbent workers would not have an
			 adverse affect on providing services to WIA participants; and if the income
			 derived from such fees is used to carry out WIA programs.
j. WIA funds may not be spent on employment
			 generating activities, economic development, and other similar activities,
			 unless they are directly related to training for eligible individuals. Employer
			 outreach and job development activities are directly related to training for
			 eligible individuals. Allowable employer outreach and job development
			 activities include:
(1) Contacts with
			 potential employers for the purpose of placement of WIA participants;
(2) Participation in business associations
			 (such as chambers of commerce);
(3)
			 Staff participation on economic development boards and commissions, and work
			 with economic development agencies to provide information about WIA programs,
			 to assist in making informed decisions about community job training needs, and
			 to promote the use of first source hiring agreements and enterprise zone
			 vouchering services;
(4) Active
			 participation in local business resource centers (incubators) to provide
			 technical assistance to small and new business to reduce the rate of business
			 failure;
(5) Subscriptions to
			 relevant publications;
(6) General
			 dissemination of information of WIA programs and activities;
(7) The conduct of labor market
			 surveys;
(8) The development of
			 on-the-job training opportunities; and
(9) Other allowable WIA activities in the
			 private sector.
k. The
			 employment or training of participants in sectarian activities is prohibited,
			 as is the construction, operation or maintenance of any part of any facility
			 that is used for sectarian instruction or religious worship. However, WIA funds
			 may be used for the maintenance of a facility that is not primarily devoted to
			 sectarian instruction or religious worship if the organization operating the
			 facility is part of a program or activity providing services to WIA
			 participants.
l. WIA Title I funds
			 may not be used for the encouragement of a business to relocate from any
			 location in the United States if the relocation results in any employee's
			 losing a job at the original location. Also, WIA Title I funds may not be used
			 for customized, skill, or on-the-job training or company-specific assessments
			 of job applicants or employees of a business that has relocated from any
			 location in the United States, until the company has operated at that location
			 for 120 days, if the relocation has resulted in any employee's losing a job at
			 the original location. Pre-award reviews must be conducted to verify that
			 employers are new or expanding and are not relocating from another
			 area.
m. A participant in a program
			 or activity authorized under Title I of WIA shall not displace (including a
			 partial displacement) any current employee as of the date of the participation.
			 In addition, a program or activity authorized under Title I of WIA must not
			 impair existing contracts for services or collective bargaining agreements. If
			 so, the appropriate labor organization and employer must provide written
			 concurrence before the program or activity begins. Regular employees and
			 program participants alleging displacement may file a complaint under WIA
			 grievance procedures.
(11) Record retention. Contractors must
			 maintain all records pertinent to funds received from IWD, including financial,
			 statistical, property, and participant records and supporting documentation.
a. Contractors shall maintain books, records,
			 and documents that sufficiently and properly document and calculate all charges
			 billed for a period of at least five years after the end of each contractor's
			 fiscal year.
b. All records must be
			 retained for a longer period of time if any litigation, audit, or claim is
			 started and not resolved during that period. In these instances, the records
			 must be retained either for five years after the end of the entity's fiscal
			 year or for three years after the litigation, audit, or claim is resolved,
			 whichever is longer.
c. Records for
			 property must be retained for a period of three years after the final
			 disposition of the property.
(12) Disaster recovery system. The contractor
			 must ensure that a satisfactory plan is in place for record recovery in the
			 event that critical records are lost due to fire, vandalism, or natural
			 disaster. All computerized or microfilmed MIS and accounting records must be
			 safeguarded by off-site or multiple-site storage of such records.
(13) Access to records. The state, U.S.
			 Department of Labor, Director-Office of Civil Rights, the Comptroller General
			 of the United States, and any of their authorized representatives must have
			 timely and reasonable right of access to any pertinent books, documents,
			 papers, or other records of the contractor to make audits, examinations,
			 excerpts or transcripts. These rights are not limited to the record retention
			 policies, but may last as long as the records are actually retained by the
			 contractor. If the contractor has established a retention period longer than
			 that required by the regulations, access to those records, by any of the above
			 organizations, does not cease until the records are actually destroyed or
			 discarded.
(14) Records
			 substitution. Substitution of original records can be made by microfilming,
			 photocopying, film imaging or other similar methods.