SUBSECTION 4.3.8.3
ACCOUNTING FOR FEDERAL AWARDS

4.3.8.3.1

Basis of Accounting

Effective Date:

Mar. 1, 1999

The fund type of the account in which the grant or entitlement transactions are recorded determines the basis of accounting. Transactions for governmental and expendable trust fund type accounts are recorded using the modified accrual basis. Proprietary and similar trust fund type accounts use the accrual basis. (Refer to Subsection 2.1.2.3.1.c.)

4.3.8.3.2

Revenue Recognition

Effective Date:

Mar. 1, 1999

4.3.8.3.2.a

Grants or entitlement revenue recorded in governmental and expendable trust fund type accounts is recognized as revenue in the accounting period when it becomes susceptible to accrual, that is, both measurable and available. In applying this definition, carefully review legal, contractual, and accounting policy requirements for guidance.

• Entitlements are recorded as revenue at the time of receipt or earlier if the accrual criteria is met. Entitlements are restricted more in form than in substance. Generally, only a failure on the part of the recipient to comply with prescribed regulations will cause a forfeiture of the resources.

• Grant revenue is recognized when the related expenditure is made. If cost sharing or matching requirements exist, revenue recognition depends upon compliance with these requirements.

4.3.8.3.2.b

Grant or entitlement revenues received by propriety and similar trust fund type accounts for operating purposes, or which may be utilized for either operations or capital acquisitions at the discretion of the recipient agency, are recognized as revenues in the accounting period in which they are earned and become measurable (accrual basis). Grants restricted for the acquisition or construction of capital assets are recorded as contributed capital. [Refer to Subsection 2.2.4.6.3.a(2)].

4.3.8.3.2.c

Receipts from federal grant and entitlement awards received before the applicable revenue recognition criteria is met are to be recorded as deferred revenue and, subsequently, recorded as revenue when the criteria is met.

4.3.8.3.3

Identification of Federal Activity by CFDA Number

Effective Date:

Mar. 1, 1999

4.3.8.3.3.a

Record federal assistance program revenues and expenditures/expenses by the unique five-digit code assigned each federal financial assistance program in the Federal Catalog of Domestic Assistance (CFDA). Preferably, this is to be done as an integral part of the agency’s grant accounting system to enable the system to produce reports by catalog number. However this may be accomplished by maintaining a crosswalk of federal programs to catalog numbers.

4.3.8.3.3.b

When catalog numbers have not been provided in the federal grant contract and can not reasonably be determined by other means, agencies should identify federal programs with a number consisting of the two-digit federal agency number and a three-digit federal program of 999 "Other Federal Assistance." (Refer to example in Subsection 5.2.2.3.2)

4.3.8.3.4

Accounting for Federal Assistance Activities Between State Agencies

Effective Date:

Mar. 1, 1999

Unless directed otherwise by federal law, regulation or federal awarding agency directive, record federal revenue and expenditure/expense activity between state agencies or institutions such that the activity is not duplicated either for accounting or reporting purposes. State agencies or institutions involved in inter-agency federal assistance activity should use the following accounting procedures:

4.3.8.3.4.a

The originating state agency records and reports the federal revenue and a corresponding expenditure/expense using Object N "Grants, Benefits, and Client Services" for the amount paid to the subrecipient agency.

4.3.8.3.4.b

The subrecipient state agency records program expenditures offset by an interagency reimbursement (Object S) for the moneys received from the original agency. This results in no net revenue or expenditure/expense to the subrecipient agency.

4.3.8.3.5

Accounting for Expenditures of Nonfinancial Federal Awards

Effective Date:

Mar. 1, 1999

4.3.8.3.5.a

Administration costs for nonfinancial federal programs are recorded as federal revenues and expenditures under the applicable CFDA program number and reported at year end on the Federal Financial Assistance - Direct Schedule.

4.3.8.3.5.b

Agencies of the state of Washington receive federal nonfinancial assistance in the form of donated inventories (primarily food commodities and disease immunization supplies). Such assistance may be received directly from a federal agency or indirectly from a custodial state agency.

Donated inventories are to be recorded as consumable inventories in accordance with Subsection 2.2.4.4.4 of this manual. State agencies must report the fair value of inventory consumed during the year on the Schedule of Nonfinancial Assistance. State agencies having inventories of federally provided commodities for distribution to other agencies or locations will not report these commodities as revenue but as consumable inventories offset by deferred revenue. Distribution by the custodial agency to the consuming agency will be recorded as a reduction of inventory by the custodial agency (no expenditure/expense). The state agency actually using the commodities reports the nonfinancial revenue and the associated nonfinancial expenditure/expense in their accounting records and on their Schedule of Nonfinancial Assistance.

For food commodities use the commodity list prepared by the Food and Nutrition Service of the U.S. Department of Agriculture to determine the fair value of the nonfinancial assistance.

Federal food donations are to be recorded as consumable inventories in accordance with Subsection 2.2.4.4.4 of this manual. State agencies must report the fair value of inventory consumed during the year on the Schedule of Nonfinancial Assistance. State agencies having inventories of foods for distribution to other agencies or locations will not report these commodities as revenue but as consumable inventories offset by deferred revenue. The state agency actually using the commodities reports the nonfinancial revenue and the associated nonfinancial expenditure/expense in their accounting records and on their Schedule of Nonfinancial Assistance. Use the commodity list prepared by the Food and Nutrition Service of the U.S. Department of Agriculture to determine the fair value of the nonfinancial assistance.

4.3.8.3.5.c

Federal food stamp distribution is to be recorded in accordance with Subsection 2.2.4.4.5 and reported on the Nonfinancial Assistance Schedule utilizing the appropriate CFDA program number.

4.3.8.3.5.d

The value of federal surplus property received by a state agency or institution is not to be recorded in the official state financial accounting records. The property is to be maintained in appropriate subsidiary ledgers for proper control of the assets. Federal surplus property is to be reported on the Nonfinancial Assistance Schedule under the applicable CFDA program number. It shall be valued at fair market value at the time of receipt or the assessed value provided by the federal agency donating the property. As part of the year-end reporting process, the Federal Surplus Program of the state Department of General Administration will provide each agency or institution with a summary report of the value of federal surplus property received by that agency or institution for the reporting year.

4.3.8.3.6

Accounting for Federal Assistance Received from Another Nonfederal Entity, Other Than Another Washington State Agency or Institution (Pass-Through)

Effective Date:

Mar. 1, 1999

Record identified federal assistance received indirectly from another state (e.g. Oregon) or local government and/or private entity as federal pass-through revenue (Revenue Source Code 446). There are additional year-end financial reporting requirements specific to federal pass-through revenue and expenditures found in Part 5 Subsection 5.2.2.7.