Playing by the Rules Ch. 1 Page
Chapter 1
Introduction
Contents
1.1 How to Use This Guide .................................................................................................................................1-2
1.2 Principal Regulations Governing CDBG Administrative Systems .................................................1-3
Playing by the Rules: CDBG Administrative Systems | Chapter 1-1
Playing by the Rules: CDBG Administrative Systems | Chapter 1-2
Notes
Chapter 1: Introduction
This guide will help you, as a CDBG subrecipient, to:
• Understand the basic administrative requirements of the CDBG program.
• Improve the management of your program activities through strong business practices.
• Enhance program performance by tracking, reporting, and evaluating program activities
and outcomes.
• Ensure accountability and ensure clean audits by documenting compliance with CDBG reg-
ulations.
Taken together, these practices will protect and enhance the reputation of both your organiza-
tion and the CDBG program in your community.
CDBG Subrecipients
A “subrecipient” may be a public agency, a public or private nonproft organization, a Commu-
nity-Based Development Organization (CBDO) if designated as a subrecipient, or a for-proft
entity authorized under 24 CFR 570.201(o) that the grantee awards CDBG funds to carry out
agreed-upon activities on its behalf (see 24 CFR 570.500(c)). By administering your activities and
meeting the administrative requirements covered in this guide, you are providing your grantee
with fexibility in accomplishing its goals and helping to strengthen its ties with the community.
1.1 How to Use This Guide
The complexity of regulations that mandate specifc procedures (the “means”) for achieving
program objectives (the “ends”) can be daunting. Specifc procedures and extensive record-
keeping may appear to be bureaucratic red tape. However, keep in mind that the required
systems and procedures:
• Are based on widely accepted standards for good business practices and apply to fnancial
transactions in all areas of business.
• Help ensure that every entity administering CDBG funds has basic management controls
and fnancial safeguards in place to ensure maintenance of the public trust.
• Provide better oversight and real-time analytic capacity that enable program managers to
continuously adjust their operations and improve their performance.
The chapters in this guide correspond to particular components of a subrecipient’s administra-
tive operations:
• Financial Management (Chapter 2).
• Procurement and Contracting (Chapter 3).
• Property Management and Disposition (Chapter 4).
• Record-Keeping and Reporting Requirements (Chapter 5).
• Other Administrative and Program Requirements (Chapter 6).
• Audits (Chapter 7).
• Closeout (Chapter 8).
Each chapter begins with a brief explanation of the underlying management principles that
apply to that facet of program administration, followed by the basic standards that grantees
and their subrecipients must meet, as specifed in the applicable regulations.
To the extent feasible, the guide lists performance standards in order from the most basic
requirements to the most specialized. This makes it possible for you to use the guide as a
checklist for building administrative systems “from the ground up,” or for reviewing existing
systems for their adequacy in meeting the standards.
Use this guide as a supplement to, not a replacement for, the regulations (including the re-
lated requirements referenced in Subpart K of the CDBG regulations) identifed in Section 1.2(b),
which follows below. Over time, using this guide as a reference tool should help you de-mystify
the regulations and become more familiar with the requirements of the CDBG program. This
knowledge, in turn, should help you avoid the pitfalls (and penalties) of noncompliance.
Playing by the Rules: CDBG Administrative Systems | Chapter 1-3
Notes
Chapter 1: Introduction
You may notice some duplication from chapter to chapter in this guide. This refects the overlap
that occasionally occurs in the regulations themselves and was retained in the text to minimize
the amount of cross-referencing.
Other Available Resources
Along with this Playing by the Rules guide, the following resources can also help both grantees
and subrecipients:
• Managing CDBG: A Guidebook for Grantees on Subrecipient Management: A compan-
ion volume as a resource for your local community in its relationship with your organization.
• Training CDBG Subrecipients in Administrative Systems: A practical guide to best prac-
tices in delivering CDBG-funded services through organizations like yours.
• Web-based resources: These guides are linked to web-based resources that will provide
you with guidance, materials, checklists, etc., to help you implement your programs.
You can learn more about your community and HUD-funded activities for low- and moder-
ate-income households and neighborhoods through the following resources:
• Your own community’s Consolidated Plan: A tool to assess its afordable housing and
community development needs and market conditions, to make data-driven, place-based
investment decisions. The consolidated planning process serves as the framework for a
community-wide dialogue to identify housing and community development priorities that
align and focus funding from the CPD formula block grant programs. In addition to CDBG,
these include the HOME Investment Partnerships Program (HOME), Housing Trust Fund
(HTF), Emergency Solutions Grants (ESG) program, and Housing Opportunities for Persons
with AIDS (HOPWA) program.
• CPD Maps: CPD Maps (HUD’s mapping and planning tool for communities) makes informa-
tion about your community more broadly available to the general public. The CPD Maps
Desk Guide is available online to help you make the best use of this valuable tool.
1.2 Principal Regulations Governing CDBG Administrative
Systems
24 CFR 570, “Community Development Block Grants": Part 570 describes the regulations of the
CDBG program in detail. 24 CFR 570, Subparts J and K include the basic program regulations
governing management and fnancial systems for the CDBG program. These sections apply
both to grantees and all subrecipients:
• Subpart J (24 CFR 570.500–570.513) addresses general responsibilities for grant administra-
tion, including the applicability of uniform administrative requirements, provisions of Sub-
recipient Agreements, program income, use of real property, record keeping and reporting,
and closeout procedures.
• Subpart K (24 CFR 570.600–570.613) deals with other Federal requirements that may be
applicable to a subrecipient’s CDBG funded activities. All CDBG funded activities must
comply with regulations addressing civil rights, uniform administrative requirements, cost
principles, and conficts of interest. Plus, depending on the activity, additional requirements
may apply for labor standards; environmental standards; food insurance; relocation; dis-
placement; acquisition; employment and contracting opportunities; lead-based paint; and/
or use of debarred, suspended, or ineligible contractors. The requirements in Subpart K
are sometimes referred to as “cross-cutting” requirements, i.e., requirements outside the
CDBG regulations that impose conditions on any activity receiving Federal funds, including
CDBG-funded activities. As an example, an activity using Federal funds which alters a histor-
ically signifcant resource must adhere to specifc public protections requiring reasonable
eforts to preserve that resource. A working understanding of the requirements in this
subpart will typically involve cross-referencing and becoming familiar with the relevant laws
and regulations, as appropriate.
Playing by the Rules: CDBG Administrative Systems | Chapter 1-4
Notes
Chapter 1: Introduction
2 CFR 200, the Omnibus Circular: 2 CFR 200, from the Ofce of Management and Budget (OMB)
governs cost principles, administrative systems, fscal procedures, and audit requirements for
grantees and subrecipients. This regulation (also called the “Uniform Guidance” or the “Super-
circular” amended 24 CFR 84 and 85, by removing all their provisions, but included a “saving
provision” stating that all Federal awards made prior to December 26, 2014, will continue to be
governed by Parts 84 or 85. The chart below provides a quick reference to the relationship of
the Omnibus Circular, Part 84, Part 85, and the various OMB Circulars it replaces.
• HUD has published a helpful guide ("2 CFR 200 Overview for HUD Grantees”) which identi-
fes where provisions of Parts 84 and 85 may be found in the new Omnibus Circular.
• A detailed analysis of the relationship between previous regulations and the Omnibus Cir-
cular can be found in the “Uniform Guidance Crosswalk from Existing Guidance to Final
Guidance,” which highlights policy changes, clarifcations, and updates to previous policy
provisions.
Executive Orders from the Office of the President: These implement various equal employ-
ment opportunity and environmental policies; these are identifed in various sections of the
regulations, as applicable.
Former HUD regulation General purpose of the Where you now primarily or OMB Circular where former regulation or circular look to find provisions incor-you used to look for porated into or modified by administrative require-the Omnibus Circular (2 CFR ments 200)
24 CFR Part 84: HUD HUD regulation implementing 2 CFR 200, Subpart D, Post Federal
“Uniform Administrative OMB Circular A-110 (applicable Award Requirements, 200.300-345.
Requirements for Grants to nonproft subrecipients) and Administrative requirements for
and Agreements with specifying standards relative to both nonprofts and governmental
Institutions of Higher Edu-requirements as to bonding and entities are generally included
cation, Hospitals, and Other insurance, retention and custodial within Subpart D.
Non-proft Organizations” requirements for records, fnancial
management systems (200.302),
monitoring and reporting on
performance, and procurement.1
24 CFR Part 85: HUD For governmental entities and 2 CFR 200, Subpart D, Post Federal
“Uniform Administrative Re-public agencies, detailed stan-Award Requirements, 200.300-345.
quirements for Grants and dards for fnancial management Administrative requirements for
Cooperative Agreements to systems, payment, property both nonprofts and governmental
State, Local, and Federal-management, procurement, entities are generally included
ly-Recognized Indian Tribal monitoring and reporting program within Subpart D.
Governments” (also known performance, fnancial reporting,
as “the Common Rule.”) record retention, and termination.
OMB Circular A-122: “Cost Established principles for deter-2 CFR 200, Subpart E: Cost Prin-
Principles for Non-Proft mining costs that are allowed ciples, 200.400-475; Appendix
Organizations” to be charged to Federal grants,
contracts, and other agreements
with nonproft organizations (ex-
cept educational institutions). The
principles are designed to ensure
that the Federal Government will
bear its fair share of costs except
VII—States and Local Government
and Indian Tribe Indirect Cost
Proposals; and
Appendix VIII—Nonproft Organi-
zations Exempted From Subpart E:
Cost Principles.
where restricted or prohibited by
law.
Cost principles for both nonprofts
and local governments are gener-
ally included within Subpart D.2
1 Not all the requirements of 2 CFR 200 are applicable to CDBG subrecipients; see 24 CFR 570.502(a) and (b) which
specify the sections and paragraphs of the Common Rule that apply to CDBG recipients and subrecipients.
2 For an exhaustive review of the relationship of the Uniform Guidance to previous circulars on cost principles for
governmental entities, nonprofts, and educational institutions (i.e., A-87, A-21, and A-122), see the “Cost Principles
Comparison Chart.”
Playing by the Rules: CDBG Administrative Systems | Chapter 1-5
Notes
Chapter 1: Introduction
Former HUD regulation
or OMB Circular where
you used to look for
administrative require-
ments
General purpose of the
former regulation or circular
Where you now primarily
look to find provisions incor-
porated into or modified by
the Omnibus Circular (2 CFR
200)
OMB Circular A-21: “Cost
Principles for Educational
Institutions”
Covered much of the same subject
matter as OMB Circular A-122, but
aimed at educational institutions
(public and private).
2 CFR 200, Subpart E: Cost Prin-
ciples, 200.400-475; Appendix
III—Indirect (F&A) Costs Identif-
cation and Assignment, and Rate
Determination for Institutions of
Higher Education (IHEs)
OMB Circular A-87: “Cost
Principles for State and
Local Government”
Equivalent of A-122 for a govern-
mental subrecipient (i.e., public
agency that is independent of the
grantee government, such as a
public housing authority, parks
commission, or a jurisdiction
cooperating with an urban county
CDBG grantee3). Established the
principles for determining the
allowable costs of programs
administered by public entities
under grants or contracts from the
Federal Government. The princi-
ples are designed to provide the
basis for a uniform approach to
determining costs and promoting
efciency.
2 CFR 200, Subpart E: Cost Prin-
ciples, 200.400-475; Appendix
V—State/Local Government and
Indian Tribe—Wide Central Service
Cost Allocation Plans; Appendix
VI—Public Assistance Cost Alloca-
tion Plans; Appendix VII—States
and Local Government and Indian
Tribe Indirect Cost Proposals
OMB Circular A-133: “Audits
of States, Local Govern-
ments and Non-proft
Organizations”
Defned audit requirements for
both governments and nonprofts
receiving Federal funds. The
document addresses the mandat-
ed frequency and scope of audits,
allowability of audit costs, and the
process of auditor selection.
2 CFR 200, Subpart F, Audit
Requirements, 200.500-520;
Appendix X—Data Collection Form
(Form SF-SAC); Appendix XI—Com-
pliance
Under the CDBG program, participating units under an urban county are considered to be part of the grantee;
however, the grantee is responsible for applying the same requirements to these participating jurisdictions as are
applicable to subrecipients.
3
Playing by the Rules: CDBG Administrative Systems | Chapter 1-6
Notes
Chapter 1: Introduction
Exhibit 1–1 below describes the regulatory framework for the CDBG program for Entitlement
Communities (i.e., metro cities and urban counties).
Exhibit 1–1: Regulatory Framework for CDBG Entitlement
Program
Beneficiaries
Executive Orders2 CFR 200
$/M LegislativeLocal Executive Federal Hand-
books
HUD Notices
Policy
Memos
Additional tools and resources on HUD.gov and HUDexchange.com
$/M
Local Public Agencies (treated as Subrecipients) Private, Non-profit Subrecipients*
Contractors ContractorsContractors
Entitlement Grantees
(Metropolitan
Cities/Urban Counties)
HUD Regulations
HCDA Section 105(a) CDBG Program
24 CFR 570
Other Program Requirements: Subpart K
Federal Statutes
Housing andCommunityDevelopment Act
Other
Federal Laws
$/M $/M
$/M$/M
$=Funds provided. M=Monitoring required.
* Includes 24 CFR 570.204(c)(2) for-profit CBDOs.