Conn. Agencies Regs. § 17-226d-4

Current through October 16, 2024

Section 17-226d-4 - Fiscal requirements

(a)Accounting system

(1) Each awardee shall utilize an accounting system which conforms to generally accepted accounting principles applicable to recipients of state and federal funds. Such system shall separately account for income and expenditures related to Commission funded projects and programs.

(2) The awardees accounting system shall meet the following minimum requirements:

(A) The system shall have a chart of accounts

(B) The system shall provide sufficient information to separately identify the receipt and expenditure of Commission funds and shall keep on file copies of all financial reports submitted to the Commission.

(C) The following accounting records and related documentation shall be made and retained:

(i) a general ledger,

(ii) a cash receipts journal,

(iii) a cash disbursement journal,

(iv) individual payroll records for all staff members employed by the awardee,

(v) all bank statements and canceled checks,

(vi) all invoices, purchase orders, vouchers and paid bills,

(vii) employee attendance records,

(viii) copies of all contracts and lease agreements to which the awardee is a party, and,

(ix) any other financial documentation that the Commission may require by regulation or by the terms and conditions of the awardee's individual letter of award or contract.

(D) The system shall provide accurate and current financial reporting information.

(E) The system shall be integrated with systems of internal controls designed to safeguard funds and assets, check the accuracy and reliability of accounting data, promote operational efficiency and encourage adherence to management policies.

(F) The system shall include procedures for regular inventories and procedures for the disposition of property and funds derived from the sale of property purchased in whole or in part with Commission funds.

(G) The system shall include procedures for recording the actual time each employee of the awardee works.

(3) Each awardee's accounting records and related documentation shall be maintained by the awardee for a period of at least three years from the end of the fiscal year. Such records shall be stored in a place safe from loss or damage by fire, theft, water or other causes. Such records shall be made readily available for review and inspection upon the request of the Commission staff.

(b)Allowable and unallowable costs

(1) Awardees may include in their budgets direct and indirect costs including use charges for buildings, capital improvements and usable equipment.

(2) Individual expenditures may be made for items and services listed in an awardee's approved budget without obtaining any additional Commission approval.

(3) An awardee must obtain the prior written approval of the executive director for the recovery during one award period of unrecovered allowable costs incurred during a previous award period, or for any costs listed in the awardee's letter of award or contract which require such prior written approval.

(4) The following costs are unallowable:

(A) capital expenditures for construction or renovation,

(B) bad debts,

(C) costs of idle facilities,

(D) royalties,

(E) depreciation or use charges for donated assets,

(F) fines and penalties resulting from violations of federal, state or local law,

(G) monetary judgments against the awardee or the cost of out of court settlements from any civil lawsuits to which the awardee is a party,

(H) actual losses which could have been covered by insurance but were not, unless such losses are specifically provided for in the awardee's letter of award or contract,

(I) costs of investment counsel,

(J) an excess of costs over income from another grant or contract,

(K) contributions to a contingency reserve fund, and,

(L) major medical equipment.

(5) When reporting income received from fund raising, an awardee may deduct the costs of fund raising from the total amount received to determine the amount of income.

(c)Review and disallowance of costs

(1) An awardee's specific expenditures from each budget category shall be reviewed and may be disallowed by Commission staff during on site reviews or reviews of the reports and annual audits which awardees are required to submit to the Commission if such costs are determined to be unallowable, unreasonable or improperly allocated or if there is improper, inadequate or no documentation supporting the costs. In review of such reports and audits, the Commission staff shall utilize the following criteria:

(A) Reasonableness: A cost shall be deemed to be reasonable if:

(i) it does not exceed that which would be incurred by an ordinarily prudent person;

(ii) it is ordinary and necessary for the awardee's operation of the funded program within the restraints and requirements imposed by generally accepted business practices, arms length bargaining, federal and state law and regulation and the terms and conditions of the awardee's contract or letter of award;

(iii) it is consistent with the purposes for which the funded program was organized; and,

(iv) it does not significantly deviate from the awardee's established practices

(B) Allocability. A cost shall be deemed to be allocable if:

(i) it is chargeable to a particular award in accordance with the relative benefits received;

(ii) it benefits and is incurred for the funded program; and,

(iii) it is necessary to the overall operation of the awardee.

(2) When, during the course of a review by Commission staff of financial reports or the annual audit or an onsite review of the awardee's financial records, a cost is identified as unallowable, unreasonable or improperly allocated, or the supporting documentation is inadequate, improper or there is no documentation, the awardee shall be notified in writing that such cost has been questioned and will be disallowed unless the awardee submits documentation within 30 days of receipt of such notification, which supports the awardee's position that such cost is allowable, reasonable or properly allocated.

(3) If the awardee fails to submit such documentation as required in subsection (2) above, or if such documentation fails to support the awardee's contention that such cost should be allowed, the executive director shall notify the awardee that the cost has been disallowed and the awardee shall return to the Commission funds equivalent to the portion of the award expended on the disallowed cost.

(d)Procedures for determining client eligibility under fee for service award

(1) Each fee for service awardee must have documentation for each client charged to the fee for service award which demonstrates that there was a determination made at the time of intake of the client's ability to pay and the availability of third party reimbursement. Redeterminations of eligibility shall be done whenever there is a change in the clients employment, financial or third party reimbursement status.

(2) Each client who is determined by the awardee to be able to pay the full fee is ineligible for coverage under a fee for service award. In such cases where fees have been assessed but not paid they may be designated as bad debts by the awardee.

(e)Disposition of surplus or excess funds

(1) When the Commission staff determines through a review of an awardee's audited financial statement or final expenditure report that the awardee has a surplus, the surplus shall be disposed of in the following manner:

(A) The awardee shall return to the Commission that portion of the surplus which is proportionate to the Commission's award of state funds applied to the awardee's approved operating expenses.

(B) That portion of the surplus which is proportionate to the Commission's award of federal funds applied to the awardee's approved operating expenses, shall, upon written notice to the awardee, be disposed of at the sole discretion of the Commission in one of the following ways:

(i) The surplus may be offset against a continuation award to the awardee,

(ii) The surplus may be used as a carryover in a subsequent budget of the awardee, or,

(iii) The surplus may be returned to the Commission.

(2) The awardee may designate a portion of unrestricted operating income or public support which is in excess of funding received from the Commission for special or future use if such funds are not needed for current operating expenses. Funds so designated shall not be deemed a surplus and the requirements of subsection (1) of this section shall not apply if such designation was authorized by the awardee's governing authority and received the executive director's approval.

(3) The requirements of subsection (1) of this section shall not apply to any awardee who operates an employee assistance program funded by the Commission. Any funds received by such awardee for employee assistance services provided by contract to an organization shall not be deemed surplus for the purposes of this section.

(4) Whenever the Commission staff determines, through a review of any awardee's final expenditure report, or fiscal or client records that excess payments have been made under a fee for service award, the awardee shall return to the Commission a payment representing the amount of the excess.

(f)Requirements for handling Commission funds

(1) Each awardee shall have written policies and procedures to safeguard the awardee's assets against loss from unauthorized use or disposition and to ensure the reliability of financial records and maintain fiscal accountability.

(2) All funds received from the Commission shall be deposited only in federally insured accounts. Interest earned on Commission funds deposited in such accounts shall be reported as program income and may be used only for those activities authorized by the terms of the letter of award or contract.

(3) When an awardee is a nonprofit organization each check drawn on an account in which Commission funds are deposited shall be signed by two signatories, who shall be authorized by the awardee's board of directors to be signatories.

(g)Procurement standards

Each awardee shall establish written policies and procedures governing the procurement of goods and services. Such policies and procedures shall be based on the principle of free competition among potential suppliers.

(h)Fee schedules and billing

(1) Awardees providing services other than treatment may impose a charge on service recipients for all or part of the cost of the services rendered.

(2) Awardees shall impose a charge on service recipients for all or part of the cost of treatment services rendered by the awardee to such service recipients.

(3) Whenever an awardee imposes a charge for services, such charge shall be in accordance with a written fee schedule which shall be based on a determination of the actual cost of the services rendered and the service recipients' ability to pay the fee. The fee schedule shall be reviewed and revised at least once each year to reflect actual changes in the cost of rendering services to service recipients and the charges assessed to each individual service recipient shall be made according to a sliding scale based on the service recipient's ability to pay. Each awardee imposing a charge for services shall design and implement a system for the collection of delinquent accounts.

(4) Awardees shall endeavor to obtain reimbursement for services rendered either from the recipient of such services or from third party payors from whom the service recipient may be eligible to receive benefits or from both.

(i)Annual audits

(1) Each awardee shall have prepared an annual audit of its financial operations and records. The audit shall be prepared by an independent Certified Public Accountant having no direct or indirect financial interest in the awardee's program. The auditor shall utilize generally accepted auditing standards and whatever tests are normally considered necessary to meet the standards of the profession.

(2) The scope of the audit may be limited to Commission funded activities provided such activities are separate and distinct, from other activities not funded by the Commission. When Commission funded activities are not separate and distinct, a total audit of the awardee's program shall be done and shall include a supplemental statement identifying all expenditures associated with Commission funding. The decision on whether or not an audit must include all of the awardee's activities is in the sole discretion of the Commission.

(3) The auditor shall prepare a management letter which shall be submitted with the audit to the Commission within 120 days of the end of the fiscal year. At the written request of the executive director the awardee shall supply information to the Commission concerning the auditor's professional qualifications.

(4) The Commission staff shall review the audit and shall determine whether it meets minimum standards of acceptability in that it conforms to the requirements of sections 17-226d-1 through 17-226d-11 and that it conforms to generally accepted auditing standards. If an audit is determined to be unacceptable, the awardee shall be notified in writing of the deficiencies in the audit and the remedial action that is required of the awardee.

(j)Insurance and bonding

(1) The awardee shall ensure that all persons employed by the awardee who are engaged in accounting functions or are responsible for guarding assets are bonded at a level acceptable to the Commission.

(2) The awardee shall obtain insurance coverage sufficient to protect the awardee against full or partial losses of the awardee's physical and financial assets and to hold harmless the State of Connecticut from any insurable cause whatsoever. Insurance coverage shall include but not necessarily be limited to:

(A) Property insurance covering losses due to fire, theft and accident;

(B) Liability insurance on the awardees property and vehicles;

(C) Worker's compensation insurance for the awardee's employees; and,

(D) Officer's and director's liability insurance.

(k)Transfer of funds

(1) With the prior written permission of the executive director an awardee may temporarily transfer funds between one program operated by the awardee and funded by the Commission under one contract or letter of award and a second program operated by the awardee and funded by the Commission through another contract or letter of award.

(2) The awardee shall apply for permission to make a temporary transfer of funds by making a written request to the executive director, which shall include reasons justifying the transfer, the anticipated duration of the transfer and a description of how the transferred funds will be repaid. Such request shall be signed by the presiding officer of the awardee's governing authority.

(3) Upon receipt of a request to transfer funds between two programs funded by the Commission, the executive director may authorize the transfer if he determines that:

(A) The transfer is necessary to ensure uninterrupted program operation;

(B) The funds will not be needed by the transferor during the period of time they are to be used by the transferee; and,

(C) The transferee can realistically expect to repay the transferred funds at the time stated in the request.

(l)Equipment and inventory

(1) The Commission shall have an interest in all equipment which was purchased by the awardee in whole or in part with Commission funds. The Commission's interest shall be equivalent to the percentage of the Commission's contribution toward the purchase price. The Commission shall not have an interest if the equipment was purchased with funds accumulated in the awardee's depreciation account.

(2) When Commission funding to an awardee ceases because the program no longer operates or because the Commission award was terminated, the Commission may in its sole discretion require any of the following dispositions of property in which it has an interest:

(A) The awardee may be permitted to retain and use the property.

(B) The property may be sold, in which case the awardee may deduct and retain 10% of the proceeds of the sale to compensate it for the costs of selling the property and shall return to the Commission a percentage of the remaining proceeds equivalent to the percentage of Commission funds used to purchase the property originally.

(C) When the Commission has provided 100% of the purchase price of the property it may:

(i) transfer the property to another Commission funded program or,

(ii) take possession of the property and use it as it sees fit in the performance of its duties.

(3) Awardees shall prepare yearly inventories of all equipment purchased with Commission funds which has a value of $300 or more and has a useful life of three or more years; or that has a value of $500 or more if the useful life is less than three years.

(m)Commission rights to material produced with Commission funds

The Commission shall have an unrestricted right to publish, disclose, distribute and otherwise use in whole or in part any reports, data, curricula or any other material including printed, written or photographic material, films and video and audio tapes without the payment of royalties to the awardee, when such material has been produced in whole or in part with Commission funds pursuant to an award that specifically requires the awardee to produce such material.

(n)Local resources

(1) Each private, non profit organization which receives Commission funding shall actively attempt to utilize local resources for financial support or goods or services to supplement the funds received by the Commission.

(2) Awardees shall document their compliance with this requirement by indicating in their funding applications for continuation awards the efforts they have made and plan to make to encourage local participation, and the results of such efforts.

(3) Applicants for Commission funding for new programs shall indicate in their applications the means by which they will obtain local participation.

(o)Maintenance of effort

Commission funding shall not be used by any awardee to supplant or replace funding from other sources unless the Commission's contract or letter of award with the awardee explicitly authorizes the awardee to do so.

(p)Financial reporting to the governing authority

Each awardee's board of directors or other governing authority shall require that the chief administrative officer employed by the awardee shall make regular reports to the governing authority concerning the financial status of the programs operated by the awardee.

Conn. Agencies Regs. § 17-226d-4

Effective September 20, 1984