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Playing by the Rules Ch. 5 Chap Recordkeeping and Repor ter 5 ting Requirements Contents Page 5.1 General Recordkeeping Requirements ..................................................................................................5-3 5.2 File Organization and Maintenance ........................................................................................................5-4 5.3 Retention of Records .....................................................................................................................................5-6 5.4 Access to Records ...........................................................................................................................................5-6 5.5 Reporting Requirements .............................................................................................................................5-6 Exercise for Chapter 5—Recordkeeping and Reporting Requirements Questions ................................................................................................................................................................ 5-11 Exercise for Chapter 5—Recordkeeping and Reporting Requirements Answers .................................................................................................................................................................... 5-12 Playing by the Rules: CDBG Administrative Systems | Chapter 5-1 Playing by the Rules: CDBG Administrative Systems | Chapter 5-2 Notes Chapter 5: Recordkeeping and Reporting Requirements Accurate recordkeeping for reporting compliance is crucial for the successful management of your CDBG-funded activities. It is essential for tracking your performance against your contract goals and allows your grantee to provide management support in its oversight of your activities. Failure to document your CDBG-funded activities adequately will undermine the success of your CDBG projects, leading to monitoring fndings that are much more difcult to resolve when records are missing, inaccurate, or otherwise defcient. As a result, it is very important to follow the recordkeeping and reporting requirements of the CDBG program, the Omnibus Circular, and any applicable cross-cutting regulations. To document your activities adequately, you will need to know: • What information you need to collect and why. • When you need to collect information (and how often). • How your information is acquired, organized, and stored. • How you report your information. • The required retention period for your records. This chapter covers the minimum standards for: • General recordkeeping. • File organization and maintenance. • Retention of records. • Access to records. • Reporting. A comprehensive chart at the end of this chapter (see Exhibit 5-1) identifes key fles you will need for three specifc types of records: • Administrative records. • Financial records. • Project records. Previous chapters provide you with the required elements for fnancial and general admin- istrative records (see Chapters 1 and 2). This chapter discusses the CDBG requirements for your project fles or case fles. Exhibit 5-1 is a checklist of the most important fles you should maintain, which your grantee will need to access when monitoring your activities. AS YOU READ THIS CHAPTER, ASK YOURSELF… 1. Does your agency have a clearly defned process for acquiring, organizing, storing, retrieving, and reporting information? 2. Can your documentation and reporting systems be strengthened? 3. Which persons in your agency are responsible for various recordkeeping and reporting tasks? 4. Can you streamline your recordkeeping and reporting procedures by standardizing your process to eliminate duplicate records? 5. Are your recordkeeping and reporting tasks automated (computerized)? Playing by the Rules: CDBG Administrative Systems | Chapter 5-3 Notes Chapter 5: Recordkeeping and Reporting Requirements 5.1 General Recordkeeping Requirements As a subrecipient, you are required to establish and maintain at least three major categories of records: Category Types of Files and Records Maintained Administrative records • Overall administration fles and records of your CDBG activities. • Personnel fles • Property management fles • General organizational management fles: • Articles of incorporation • Bylaws • Tax status • Board minutes • Contracts • Other agreements (memorandum of understanding) • Program funding award fles: • Your application and all related records requesting CDBG funds • Program policies and guidelines • All grantee correspondence • Your subrecipient agreement • Compliance reports Financial records • Chart of accounts • Accounting procedures manual • Accounting journals and ledgers • Source documentation (purchase orders, invoices, bank records, etc.) • Procurement fles • Bank account records • Financial reports • Audit fles Project or case fles • Project activities • Regulatory compliance (e.g., cross-cutting requirements, etc.) • Individual benefciaries • Property owners and/or properties The universal CDBG recordkeeping standard is that all records must be accurate, complete, and orderly. In your subrecipient agreement, your grantee will establish the specifc recordkeeping requirements (24 CFR 570.503(b)(2)). Detailed recordkeeping requirements for subrecipients are found in 24 CFR 570.506. Through monitoring, your grantee will confrm your compliance with all pogram requirements applicable to the activities you undertake. Therefore, you need to maintain records sufcient to: • Provide a full description of each activity assisted with CDBG funds that includes: • The address or legal description (location) of where the activities occur. • The amount of CDBG funds budgeted, obligated, and expended for the activity. • The regulatory provision under which the activity is eligible. • Demonstrate that each activity undertaken meets one of the CDBG National Objectives (24 CFR 570.208). • Meet the recordkeeping standards specifed in 24 CFR 570.506(b)(1)-(12). • Document your CDBG eligibility determinations as required for certain activities, includ- ing: Playing by the Rules: CDBG Administrative Systems | Chapter 5-4 Notes Chapter 5: Recordkeeping and Reporting Requirements • Interim assistance (24 CFR 570.201(f)). • Relocation (24 CFR 570.201(i)(2)). • Technical assistance (24 CFR 570.201(p)). • Loans to refnance existing indebtedness secured by a property being rehabilitated (24 CFR 570.202(b)(3)). • Activities carried out by Community-Based Development Organizations (CBDOs) (24 CFR 570.204). • The preparation of applications for other Federal programs (24 CFR 570.206(f)). • Special economic development activities (24 CFR 570.209). • Document your compliance with any change of use of real property acquired or improved with CDBG funds (24 CFR 570.503(b)(7)(i) and (ii)). • Demonstrate your compliance with the acquisition, displacement, relocation, and re- placement housing (24 CFR 570.606). • Detail your fair housing activities and compliance with equal opportunity (24 CFR 570.601). • Maintain all necessary information for cross-cutting program requirements specifed in Subpart K of 24 CFR Part 570, which includes: • Labor standards. • National food insurance. • Employment and contracting opportunities. • Lead-based paint. • Use of debarred, suspended, or ineligible contractors or subrecipients. • Confict of interest (24 CFR 570.611). Your organization is not responsible for providing environmental review documentation for an activity because subrecipients cannot assume the grantee’s environmental responsibilities (24 CFR 570.503(b)(5)). However, actions that you provide to support the grantee in carrying out its environmental review responsibilities and any other actions you take to abate or address environmental fndings must be documented. 5.2 File Organization and Maintenance You should structure your project case fles and other records to facilitate compliance with the general requirements noted in the preceding section. For example, you should include all grantee requested documentation needed for their reporting into the Integrated Disburse- ment and Information System (IDIS) and the grantee’s Consolidated Annual Performance and Evaluation Report (CAPER). For each type of activity undertaken, you should consult with your grantee to determine the data that must be maintained in each of your case fles and establish a system for ensuring that every fle contains this necessary information. Your list may vary from activity to activity. However, each project or case fle should include documentation sufcient to establish the: • National Objective being met (24 CFR 570.208). • Characteristics and location of benefciaries. • Eligibility of activities (24 CFR 570.201-203). • Compliance with special program requirements, including your local policies. • Allowability of the costs (2 CFR 200.403). • Status of the case or project. You can use this guide to develop a list of all the documents you must maintain on a project or activity basis. For example, if you are carrying out a housing rehabilitation program using private contractors, each project case fle should contain relevant records, including: 1. The owner’s application for assistance with the property address. Playing by the Rules: CDBG Administrative Systems | Chapter 5-5 Notes Chapter 5: Recordkeeping and Reporting Requirements 2. Household size and income documentation for all occupants residing at the property (in- cluding multi-unit buildings). 3. Necessary fnancial information to determine program eligibility and conduct underwrit- ing to determine the amount of fnancial assistance. 4. The demographic information on the anticipated or actual benefciaries of the project activity. 5. The property’s rehabilitation work write-up and cost estimates. 6. Verifed evidence of any owner contribution or private loan match. 7. Your fnancial assistance agreement between you and the property owner, which should specify: • The amount of assistance. • Intended uses. • Matching requirements, along with details of any owner contribution needed to com- plete the job. • General program requirements, such as occupancy by low- and moderate-income households. • Repayment terms. • Any other requirements specifc to your homeowner rehab program, such as: • Lien requirements. • Up-to-date payment of property taxes. • Requirements to maintain property insurance. • The contractor license. • Changes in the scope of work during the project. • Participation in inspections and/or sign-of for contractor payment. • Any post-project owner-occupancy or lease requirements, etc. 8. Copies of liens securing your loan. 9. Documentation of the contractor solicitation and selection process. 10. Copies of rent afordability, where applicable. 11. The executed construction contract, with all necessary provisions. 12. Documentation of compliance, as applicable, with: • Historic preservation (24 CFR 570.202(d)). • Flood insurance (24 CFR 570.605). • Lead-based paint requirements (24 CFR 570.608). • Davis-Bacon (typically not triggered by single-unit homeowner rehabilitation). • Relocation/anti-displacement (24 CFR 570.606). • Other relevant program rules. • Any specifc requirements included in your subrecipient agreement or your agreement with the homeowner. 13. Evidence of your periodic on-site inspection and sign-of on rehabilitation work, including fnal inspections by your staf, the grantee, and/or the local government, as applicable. 14. Copies of all change orders, with proper authorization. 15. Disbursement records for completed and approved work. (Review to ensure that the data in your project fles agrees with your fnancial records.) Implementing an efcient method for assembling cumulative data on your activities to be included in periodic reports required by the grantee is important. As cases or projects are initiated, consider creating systems for recording and totaling programmatic data (by type of activity, units of service, numbers of benefciaries, etc.) collecting aggregated statistics you can use when a progress report is due. By establishing such logs at the start of a CDBG activity Playing by the Rules: CDBG Administrative Systems | Chapter 5-6 Notes Chapter 5: Recordkeeping and Reporting Requirements based on your grantee’s reporting requirements (see Section 5.5), you can save considerable time and efort for the duration of the activity. Subrecipients should develop an automated reporting system that permits the collection and manipulation of all data elements you will need to produce your required reports, plus any fu- ture reports you may want later. Your assessment requires a careful review of your current and anticipated operations and an evaluation of the “interface” between your computer system and your staf who will input the data and the staf who will use the generated reports. In es- tablishing such a system, it will be helpful to become familiar with the data entry requirements and processes needed by your grantee for IDIS. 5.3 Retention of Records See 24 CFR 570.502 and 2 CFR 200.334. The grantee will expect to see adequate documentation of all program activities when mon- itoring your program. To ensure all program records are readily available, and ensure public access to information on your activities, you must retain your records for extended periods, even though the activity may have been completed for some time. For all subrecipients, the provisions of 2 CFR 200.334 as modifed by 24 CFR 570.502(a)(7)(ii) apply: 1. In general, you must retain records on CDBG-funded activities for the longest of the fol- lowing: • Three years after the expiration or termination of the subrecipient agreement. • Three years after your grantee’s submission of the CAPER in which your specifc activity is reported for the last time (24 CFR 570.502(a)(7)(ii)(A)). 2. You must retain records for individual activities subject to the reversion of assets provi- sions at 24 CFR 570.503(b)(7) for as long as this provision continues to apply to the activity (24 CFR 570.502(a)(7)(2)(B)). 3. You must retain records for individual activities for which there are outstanding loan bal- ances, other receivables, or contingent liabilities until such receivables or liabilities have been satisfed (24 CFR 570.502(a)(7)(ii)(C)). 4. If any litigation, claim, audit, negotiation, or other action involving your records has started before the expiration of the 3-year period, your records must be retained until all fndings involving your records have been resolved and fnal action is taken (2 CFR 200.334(a)). 5.4 Access to Records Representatives of the grantee, HUD, the Comptroller General of the United States, or other authorized governmental agencies have the right to access any of your pertinent records to make audits, examinations, excerpts, and transcripts (2 CFR 200.337). Consistent with applicable state and local laws regarding privacy and obligations of confdenti- ality, you also must provide citizens with reasonable access to records on the past use of CDBG funds (24 CFR 570.508 and 2 CFR 200.338). 5.5 Reporting Requirements Your reporting requirements are specifed by the grantee in your subrecipient agreement (24 CFR 570.503(b)(2)). These reporting requirements must also be consistent with the provisions of 2 CFR 200, Appendix II-Contract Provisions. Your grantee has discretion over the type and frequency of reports they will require, but is likely to request at least three kinds of reports from you: 1. Information on drawdown requests. Playing by the Rules: CDBG Administrative Systems | Chapter 5-7 Notes Chapter 5: Recordkeeping and Reporting Requirements For periodic drawdown requests, you need to provide information to your grantee on the fnancial status of your operations, including (for each activity) the amount of: • Funds budgeted. • Funds already received to date. • Funds obligated in the current period and to date. • Funds expended in the current period and to date, with backup documentation for any funds being requested. • Cash on hand (including identifed program income). • Previous drawdowns requested but not yet received. 2. Regular progress reports. You need to provide regular progress reports (typically on a monthly or quarterly basis) to your grantee. Progress reports track actual project accomplishments, obligations, and spending patterns against planned operations and accomplishments in accordance with the project schedule and budget sections of your subrecipient agreement. 3. CAPER data. To prepare and submit its CAPER to HUD as required by 24 CFR 570.507, your grantee will use information from your progress reports and will notify you if they need additional in- formation. Although the information needed varies by activity type, generally, the grantee must report the following items in IDIS and in its CAPER for each funded activity: • The activity’s name, description, and location. • The type of eligible activity (matrix code). • The National Objective being met. • The amount expended during the program year. • The total cost of each single-unit and multi-unit housing structure rehabilitated (24 CFR 570.202(a)) and economic development activity 24 CFR 570.203(b). • The amount of unliquidated obligations for each public service, and planning and ad- ministration activity if CDBG funds are not disbursed during the 90 days after the end of the grantee’s program year. • Activity status and specifc units of accomplishments, including compliance with the applicable National Objective, during each program year. The CAPER requires information on rehabilitation activities (separated for single units and each multi-unit property), including: • Activity delivery costs expended in carrying out rehabilitation reported as part of the cost of the rehabilitation activity or reported as a separate activity. • The number of units proposed and completed. • The number of units in each multi-unit structure initially occupied by low- and moder- ate-income households following rehabilitation. • For multi-unit properties, the amount proposed and expended from CDBG and other public and private sources. The CAPER also requires data on: • CDBG-assisted benefciaries of direct beneft activities (expressed in total households/ persons assisted; number of extremely low-income,1 low- income,2 and moderate-in- come households/persons;3 and ethnic characteristics of benefciaries). • The source and amount of program income received during the program year. • Number and total dollar amount of outstanding loans. 1 Households earning equal to or less than 30% of area median income 2 Households earning equal to or less than 50% of area median income 3 Households earning equal to or less than 80% of area median income Playing by the Rules: CDBG Administrative Systems | Chapter 5-8 Notes Chapter 5: Recordkeeping and Reporting Requirements • CDBG-acquired property to be sold. • Households displaced in connection with CDBG activities. As mentioned in Section 5.5 above, you should carefully identify your CDBG reporting respon- sibilities when designing the recordkeeping system for your CDBG-funded activities. A fnal area of reporting not discussed in this chapter concerns annual audits, which is ad- dressed in Chapter 7. Exhibit 5–1: Recordkeeping Checklist for Tracking Activities PDF • Use this checklist for each grant awarded. • Enter a new date each time you update the checklist. • Update the checklist after you conduct an internal project review, after your grantee moni- toring visit, or when key documents are modifed or received from your grantee. Date Checklist Last Updated: ______________ Documents to be Main- tained Document Source Status Source Date Complete? Location Project Application Y N †Original Application †Subrecipient †Notice of Award †Grantee †Amendments to Application †Subrecipient/Grantee †Approval of Amendments †Grantee †Correspondence †Subrecipient/Grantee Pre-Award Documentation Y N †Articles of Incorporation/ Bylaws †Subrecipient †Non-proft Determination †Subrecipient †List of Board of Directors †Subrecipient †Authorization to Request Funds †Subrecipient †Authorized Ofcial †Subrecipient †Organizational Chart †Subrecipient †Résumés of Chief Admin. and Chief Fiscal Ofcers †Subrecipient †Financial Statement and Audit †Subrecipient †Confict of Interest State- ment †Subrecipient †Plan for Compliance with National Objectives †Subrecipient †Lobbying Statement †Subrecipient †Environmental Review †Subrecipient Subrecipient Agreement Y N †Subgrant/Subaward Amount †Grantee †Date of Subgrant/Subaward †Grantee †Statement of Work †Subrecipient Playing by the Rules: CDBG Administrative Systems | Chapter 5-9 Notes Chapter 5: Recordkeeping and Reporting Requirements Documents to be Main- tained Document Source Status Source Date Complete? Location †Budget by Task/Activity †Subrecipient †Schedule by Task/Activity †Subrecipient †Standard Provisions Included? †Grantee †Amendments (Dates) †Grantee Financial Records Y N †Current Approved Budget †Subrecipient/Grantee †Authorization Letter/ Signatures †Subrecipient †Financial Management Systems (accounting books, software, reporting systems) †Subrecipient †Chart of Accounts †Subrecipient †List of Source Documents to be maintained †Subrecipient †Financial Status Report (total budget, amount expended, unliquidated obligations, obligations, unobligated balance) †Subrecipient †Drawdown Request Forms †Subrecipient †Drawdown Request Reports †Subrecipient †Executed Contracts/Bid Documents †Subrecipient †Board Minutes for Approval of Contracts or Bids †Subrecipient †Copy of Most Recent Audit Report †Subrecipient †Certifcation of Insurance Coverage/Bonding †Subrecipient †CDBG Payroll Records †Subrecipient †Certifed Construction Payroll Records (Davis-Ba- con applicable) †Subrecipient †Approved Cost Allocation Plan †Subrecipient/Grantee †Relevant Financial Corre- spondence †Subrecipient/Grantee Project Monitoring and Control Y N †Completed Monitoring Reports †Grantee †National Objectives Documentation †Subrecipient †Eligible Activities Documen- tation †Subrecipient Playing by the Rules: CDBG Administrative Systems | Chapter 5-10 Notes Chapter 5: Recordkeeping and Reporting Requirements Documents to be Main- tained Document Source Status Source Date Complete? Location †Activity Status Report (scope, cost, schedule/ actual vs. agreement) †Subrecipient †Drawdown Requests/ Reports †Subrecipient †Subrecipient Stafng †Subrecipient †Meeting Minutes †Subrecipient †Telephone Log/Notes †Subrecipient †Correspondence †Subrecipient Regulatory Compliance Files Y N †HUD Monitoring Results †HUD/Grantee †Real Property Inventory, Management, and Change of Use †Subrecipient †Anti-Discrimination, Fair Housing, EEO, ADA/504 Certifcations †Subrecipient †Procurement, Bonding, Insurance †Subrecipient †Labor Standards †Subrecipient †Acquisition, Displacement, Relocation, Replacement Housing †Subrecipient †Environmental Review (Part 50) †Grantee †Loan Status Reports (Economic Development, Rehabilitation) †Subrecipient/Grantee †Administrative Activities †Subrecipient †Flood Insurance Purchase †Subrecipient Other Project/Activity Files Y N †Plans and Specs (rehabilita- tion, historic preservation) †Subrecipient †Orientation and Training †Subrecipient †Special Case Records †Subrecipient Playing by the Rules: CDBG Administrative Systems | Chapter 5-11 Notes Chapter 5: Recordkeeping and Reporting Requirements Exercise for Chapter 5—Recordkeeping and Reporting Requirements Questions Review the following examples, then decide if the approach being taken is adequate or inadequate. Explain where you feel the approach is “inadequate” and why. What might be done differently? 1. John Smith, the program director for the CDBG-funded housing rehabilitation activities of Housing Alliance, Inc., worked diligently with his staf to ensure that every case fle contained the information specifed in the subrecipient agreement for necessary records. As a result, in preparing periodic progress reports, Mr. Smith was able to review each case fle and be confdent of fnding all the data necessary to be included in the reports. †Adequate †Inadequate Comment: 2. Four years had passed since the submission of the grantee’s fnal Consolidated Annual Performance and Evaluation Report (CAPER) detailing Family Support, Inc.’s counseling services. The independent public accountant (IPA) audit performed for Family Support, Inc. for the time period in question had not included any fndings or questioned costs relating to this project. Joanne White, the executive director of Family Support, Inc., conse- quently directed her staf to discard the records of this CDBG-funded activity. †Adequate †Inadequate Comment: 3. Delroy Blaise wanted his subrecipient agency to take advantage of the efciencies of auto- mated data processing for its recordkeeping and reporting functions but did not have any- body on his staf with computer expertise. Therefore, he hired a computer consultant who assisted the agency in purchasing a microcomputer, wrote specifc software for entering data and generating reports for all the information currently required by the grantee, and trained the staf in its use. †Adequate †Inadequate Comment: The answers are on the next page. Playing by the Rules: CDBG Administrative Systems | Chapter 5-12 Notes Chapter 5: Recordkeeping and Reporting Requirements Exercise for Chapter 5—Recordkeeping and Reporting Requirements Answers Each of the three cases on the previous page is an example of a situation where the subrecip- ient is probably in technical compliance with the requirements for recordkeeping and reporting but may not be taking sufcient action to maximize the efciency of its operations or to avoid future problems. 1. Although John Smith has taken steps to ensure that his agency could provide the grantee with the required report data, the necessity of having to search through each case fle each time a report is due might be not an efcient use of his agency’s personnel resources. Mr. Smith’s organization should also have developed summary sheets of the case fles and chronological program logs with key characteristics, from which periodic aggregate tallies could be derived much more efciently. 2. The 3-year retention rule for records might best be viewed as a minimum. It is always theoretically possible that an entity like the HUD Ofce of the Inspector General (OIG) or the General Accounting Ofce (GAO) may show up to perform an audit after the 3 years have elapsed and request access to such records concerning some questionable costs. Therefore, even after the 3 years, for your own protection, you may want to place the records in storage for an additional year or two, rather than discard them. 3. When automating recordkeeping and reporting functions, a key consideration is ongoing flexibility. In this case, because the software was designed specifcally for the current re- cord/reporting requirements, if the data desired by either the subrecipient or the grantee changed, it is not clear whether the agency had the technical capacity to modify its com- puter system accordingly. The agency may have been better served if it had purchased a more “user-friendly” generic software package that its own staf could learn to modify. These examples have been included to remind the reader that the requirements contained in this guide represent minimum standards for administrative, fnancial, and management systems. These minimums should not automatically become your maximums. Although HUD cannot require grantees and subrecipients to go beyond these regulatory standards, it is often in your agency’s interest to strive for the “best management practice” possible or to build an extra margin into your systems, in recognition of the fact that there will always be some unex- pected demand on these systems or other problems that may arise.