GAB Decision 206
August 28, 1981 Marshalls Community Action Agency; Docket No. 81-1
Ford, Cecilia; Settle, Norval Garrett, Donald
On December 29, 1980, the Marshalls Community Action Agency (Grantee)
appealed the $556 disalloance made by the Regional Administrator, Office
of Human Development Services (Agency), on December 22, 1980. The issue
is the allowability of certain charges to the Grantee's Head Start grant
for the year October 1, 1978 to September 30, 1979.
By letter dated May 12, 1981, the Board sent to the Grantee an Order
to Show Cause why the Board should not uphold the determination by the
Agency, based on tentative findings and analysis set forth in the Order.
The Order stated that a response should be submitted within 30 days of
its receipt. A U.S. Postal Service Return Receipt showed no response, a
letter was sent to the Grantee on July 2, 1981 stating that unless the
Grantee responded to the Order (including a request and justification
for an extension of time) or notified the Board that is had previously
submitted a response, within 20 days of receipt of the letter, the Board
would proceed to decision on the basis of the record as it is presently
constituted. A U.S. Postal Service Return Receipt showed delivery to
the Grantee on July 9, 1981. The Board has received no response.
Based on the foregoing, the Board adopts the findings, analysis and
conclusions set forth in the attached Order.
Conclusion
For the reasons stated above and in the attached Order, we uphold the
disallowance in the amount of $556.
(2) May 12, 1981
ORDER TO SHOW CAUSE
On December 29, 1980, the Marshalls Community Action Agency (Grantee)
appealed the $556 disallowance made by the Regional Administrator,
Office of Human Development Services (Agency), on December 22, 1980.
Additional documentation was provided by the Grantee on January 16,
1981.
The notification of disallowance stated that the $556 represented an
"unlocated difference." After two requests by the Board (one, a
memorandum dated January 30, 1981 and the second, an Order to Show Cause
dated March 4, 1981), the Agency has finally provided on April 23, 1981
an explanation and clarification of the disallowance which included a
letter dated March 31, 1981 from the Grantee's auditor to the Agency.
That letter stated:
Our audit of the above mentioned grant located a difference between
the accounts receivable subsidiary ledger and the accounts receivable
general ledger control account balance of $556. The Agency was unable
to reconcile this amount nor were we able to do so through appropriate
audit techniques. Therefore, the amount in question was written off to
"other costs" in order to bring the subsidiary and general ledger
into
balance. As such, in our opinion, it constitutes a questioned cost.
The Grantee has not yet provided any documnetation as to the
allowability of this cost to the Head Start grant to which it has been
charged. It is a basic prinicple of grants law that to be allowable
under a grant program, costs must be necessary and reasonable for proper
and efficient administration of the grant program, be allocable to that
program, and conform to any limitation or exclusion set forth in federal
laws or other governing limitation as to types or amounts of cost items
(see 45 CFR Part 74, Appendix F). It does not appear that the Grantee's
auditor was able to determine the cost's allowability and unless the
Grantee can so demonstrate, the Board will uphold the disallowance.
It does not appear likely that an evidentiary hearing will be
required or that an informal conference will be useful in this appeal.
(3) The Grantee should show cause in writing, within 30 days of the
receipt of this Order, why the Board should not proceed to decision,
identifying the respects, if any, in which the foregoing summary is
materially incomplete or inaccurate, the issues of material fact, if
any, which are in dispute, and the reasons, if any, why the appeal
should not be denied because the cost in question has not been shown to
be allowable. The Agency may but is not required at this time to
respond to this Order but will be afforded an opportunity to respond if
the Grantee's response raises any issue that appears to require further
consideration by the Board.
OCTOBER 22, 1983