DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Organization of the Forgotten American
Docket No. 86-108
Audit Control No. 10-65036
Decision No. 850
DATE: March 20, 1987
DECISION
The Organization of the Forgotten American (Grantee) appealed
the
disallowance by the Office of Human Development Services,
Administration
for Native Americans (ANA/Agency), of $5,091 in costs claimed
under ANA
grant no. 90NA0236/01 for the budget period June 1, 1984 through
June
30, 1985. ANA funds are awarded to Grantees for programs which
promote
the economic and social self-sufficiency of Native Americans.
See 45
CFR 1336 (1984). The Agency disallowed costs in two areas because
the
Grantee failed to provide satisfactory documentation for the
questioned
costs. The Agency disallowed $3,191 on the ground that the
Grantee
failed to provide the required 20 percent federal matching share,
and
$1,900 in travel costs on the ground that the travel was not
incurred
specifically for purposes of the grant.
For the reasons discussed below, we uphold the Agency's disallowance
in
full.
Discussion
A. Non-federal share
In the disallowance letter, dated May 21, 1986, the Agency notified
the
Grantee that its remaining non-federal or matching share was
$3,191.
The Agency arrived at this figure by (1) using the total federal
share
of $79,111 as the grant's maximum permissable 80 percent federal
share,
(2) calculating the Grantee's required minimum 20 percent non-federal
or
matching contribution to the grant, i.e., $19,778, and (3)
subtracting
the Grantee's proven match of $16,587, to arrive at the
$3,191
shortfall.
The Grantee made two written submissions to the Board, and it made
final
oral arguments in a conference call held in this case. In its
initial
submission, the Grantee argued that its non-federal share
requirement
for the grant involved in this disallowance was 20 percent of
the
federal monies ($79,111), or $15,822. Thus, since it had
already
provided $16,587, the Grantee argued that it had provided $765 in
excess
of the required amount.
In its second submission, the Grantee, for the first time, requested
a
matching share "waiver" in accordance with 45 CFR 1336.50(b)(3)(ii).
1/
The Grantee maintained that a waiver may be granted when an
applicant
can document that reasonable efforts to obtain cash or
in-kind
contributions for the purpose of the project from third parties
have
been unsuccessful; it submitted letters from various organizations
to
illustrate its unsuccessful attempts recently to solicit
contributions.
(Grantee's October 10, 1986 submission, Ex. I)
The Agency maintained that the Grantee's method of calculation of
the
non-federal share was simply wrong. The Agency argued that
the
Grantee's position is inconsistent with the applicable regulation at
45
CFR 1336.50(b)(1), which requires the Grantee to provide 20 percent
of
the total grant (project) cost. Moreover, the Agency contended
that
this identical requirement was set out in its April 1981 ANA
Audit
Guide, section 3.24. (Agency's brief, Ex. O)
In its response to the Grantee's request for a waiver, the
Agency
rejected the request and stated that a waiver of the non-federal
share
requirement at this time is inappropriate. The Agency maintained
that
the waiver provision under 45 CFR 1336.50(b)(2) requires that a
request
for a waiver be made as part of a prospective grantee's
application.
The Agency argued that the requirement that a waiver request be
made at
the time of the application is of major importance because the
request
for a waiver is a determining factor whether or not to award the
grant.
To allow the request at this time would therefore be unjust to the
other
grant applicants.
Section 1336.50 of 45 CFR states, in part:
(b) Cost sharing or matching - (1) Policy.
Recipients of financial
assistance . . . are required to provide a
matching share of 20
percent of the approved cost of the assisted
project. (emphasis
added)
The Board is bound by all applicable laws and regulations, 45 CFR
16.14,
and therefore, must enforce all of them, including the
cost-sharing
regulation applicable to the Grantee. There is no question
that the
regulation specifies a 20 percent match, and that the percent must
be
applied to the total of all project costs, not just those
costs
represented in federal dollars.
Moreover, the Grantee is also bound by the terms and conditions of
the
grant or project agreement. A copy of the Notice of
Financial
Assistance Award, submitted by the Grantee, indicated at line 15A
that
the total federal approved budget was $90,000. Further, at line 17,
the
total recipient participation was listed as $22,500 or 20
percent.
(Grantee's June 20, 1986 submission, Ex. A) If we were to
accept the
Grantee's argument that its non-federal share is 20 percent of
the
federal share, the amount listed at line 17 would be $18,000,
not
$22,500. Therefore, we find that the Grantee's argument is
completely
without merit, that the Grantee had notice of its obligation under
the
grant award, and that the Grantee had constructive knowledge of
this
requirement.
Section 1336.50(b)(2) of 45 CFR states:
Application. If an applicant wishes to request a waiver of
the
requirement for a 20 percent non-Federal matching share, it
must
include with its application for funding a written justification
that
clearly explains why the applicant cannot provide the matching
share
and how it meets the criteria. (emphasis added)
As noted above, the Board does not have the authority to waive
the
Grantee's non-federal share requirement for the grant at issue.
The
regulation is unambiguous and clearly provides the standards
for
approving a waiver. Moreover, the Agency's refusal to grant a
waiver at
this time is reasonable, because it is clear that the Grantee did
not
meet the requirements in the regulation.
Finally, the Grantee contended that the Certified Public Accountant
(CPA)
for this grant had donated an additional $2,640 of in-kind
contribution which
the Agency did not include in its calculation of the
original $16,587
non-federal share amount provided by the Grantee.
(Grantee's October 10, 1986
submission, Ex. G-1) The record does not
indicate that this information
was submitted before this time.
The Agency rejected the Grantee's documentation for an additional
$2,640
of CPA in-kind services to be added to its non-federal
share
contribution for two primary reasons. First, the Agency argued
that the
documentation was inadequate. The Agency maintained that
two-thirds of
the document is blanked out, and that the document is not
dated.
Further, the Agency argued that the document reveals that at
least
one-half of the in-kind services were performed in 1986 rather
than
1985, and that the services may have related to matters other than
the
grant at issue. 2/ Secondly, the Agency stated, in the
conference
call, that although it did not look behind the original $16,587
of
non-federal share in-kind volunteer services, it felt that
any
additional amounts for CPA services for a grant of this size
was
inappropriate. Moreover, the Agency questioned the cost listed for
each
item in the document. 3/ Finally, even though the record
does not show
what the $16,587 consisted of, the record suggests that some
portion
also was accounting services (See, e.g., Ex. D to Notice of
Appeal).
The Agency's refusal to accept the Grantee's additional $2,640
of
in-kind contribution is reasonable and within the Agency's
authority.
4/ The Agency's finding that the document is insufficient on
its face
is a legally sufficient basis for the disallowance. On the
face of the
document, the Agency has found significant weaknesses not
rebutted by
the Grantee. The Board has previously found that while we
will accept
non-contemporaneous documentation, the sufficiency of the
documentation
will be carefully scrutinized. Indiana Department of
Public Welfare,
Decision No. 772, August 7, 1986. In the instant case,
we find that the
Agency reasonably determined that the Grantee has not
sufficiently met
its burden of documentation. Furthermore, we agree
that on its face,
the amount claimed as accounting services has been
insufficiently
justified, was submitted after the fact, and that the Grantee
has not
substantively responded to the questions raised by the Agency.
B. Unallowable travel expenditures
Prior to a March 1985 trip taken by two of its former employees
to
Washington, D.C. and New York City, the Grantee arranged with the
Agency
to advance its employees the money for the trip, and to be reimbursed
by
the Agency, indicating that the travel was grant-related. In
March
1985, during the trip to Washington, D.C., the employees were
reimbursed
by the Agency with the intent that they would in turn give the
money to
the Grantee upon their return from the trip. However, the
employees did
not return the money to the Grantee. As a result of the
subsequent
audit, the Agency concluded that the travel was not grant-related
and
disallowed $1,900 as unallowable travel expenditures. The
Agency
directed the Grantee to reimburse the money to the grant.
(Agency's
brief, Exs. A and C)
The Grantee maintained that it was informed by the Agency that it would
be
reimbursed for staff travel expenses and that, therefore, the Agency
is
obligated to reimburse it. The Grantee also contended that since
the
Agency "interfered with its internal management and day-to-day
affairs,"
it must share
the responsibility of the Grantee's inability to collect the
money
advanced to its former employees. Additionally, the Grantee
submitted
documentation to show that the travel by its former employees
was
directly grant-related, 5/ and that it had attempted to collect
the
money as directed, but its attempts have been unsuccessful.
The Agency argued that the trip the Grantee's former employees took
was
for the purpose of carrying on organization business, but not for
the
grant in question and that, accordingly, it is not obligated
to
reimburse the Grantee from grant funds. The Agency also denied
the
Grantee's allegation that it interfered in the Grantee's
activities.
Instead, the Agency maintained that it helped to administer the
grant as
it was required to do. Finally, the Agency rejected the
documentation
submitted by the Grantee because the documentation did not
prove that
the travel directly involved grant-related activities.
Federal regulations clearly require that expenditures be supported
with
adequate documentation. 45 CFR 74.61 (1984). The Board has
consistently
held that a grantee has the burden to document
expenditures. See, e.g.,
New York City Human Resources Administration,
Decision No. 720, January
30, 1986. Further, we have said that it is a
fundamental principle of
grant adminis- tration that a grantee must document
that claimed
expenditures were reasonable and were incurred to further the
purposes
of the grant. Bullock County Health Services, Inc., Decision
No. 360,
November 20, 1982. The documentation submitted by the Grantee
is
insufficient to support its claim. The Grantee's exhibits are
general
summaries of organizational affairs but do not support the
Grantee's
assertion that the activities were grant-related. Exhibit H of
Grantee's
October 10, 1986 submission stated, in part:
I believe that we had a very eventful and successful trip, we
however
have some additional work to do on the Loan Grant application
that we
will begin at our [earliest] opportunity.
Further, Exhibit H-1 stated, in part:
On Thursday . . . I worked with . . . ANA Program Specialist on
the
budget revision and getting the Loan Grant application. We
also met
with . . . ANA Project Supervisor about our pending ANA
Grant
application. We also talked to . . . former B.I.A.
Commissioner . . .
about some direction in funding sources for our
loan application.
Even assuming that the above references related to the grant at
issue,
which has not been shown, general references about a "loan
grant
application" do not provide the type of documentation necessary
to
support its entire claim. The documents failed to show what
percentage
of time, if any, was devoted to any grant- related
activities.
Moreover, since the travel occurred in March 1985 and the grant
period
ended in June 1985, it would appear that an application of any
type
would not apply to the grant at issue. Even providing the Grantee
the
most liberal interpre- tation of its documents, they do not, in
any
event, support travel to two cities for two employees over a
ten-day
period. Finally, the Grantee has not provided any evidence to
support
its vague claim that the Agency interfered with its
day-to-day
activities. However, even if the Grantee had provided such
evidence,
this still would not have obligated the Agency to reimburse the
Grantee
when it reasonably concluded that the Grantee's employees performed
no
grant-related activities. Therefore, the Grantee alone must bear
the
burden of its failure to collect the grant funds from its
former
employees.
Conclusion
Based on the foregoing, we affirm the Agency's disallowance of $5,091.
________________________________
Donald
F. Garrett
________________________________
Charles
E. Stratton
________________________________
Norval
D. (John) Settle Presiding Board Member
1. The Grantee also argued that it relied on the
guidance of Agency
officials for interpretation of federal guidelines.
Additionally, the
Grantee indicated that it "felt it had received an implied
approval" of
a less than 20 percent match from the Agency; however, the
Grantee never
provided any specific reasons for its position. The
Agency maintained
that the Grantee never received such approval.
Moreover, the Agency
argued that the Grantee did not report any problems with
its federal
share match requirement in any of the financial reports that
are
required of grantees every three months during the grant period.
We
find that since the Grantee never specified any reasons why it felt
that
it had received such approval from the Agency or provided any
evidence
to support its position, the Grantee's argument is without
merit.
Additionally, the Grantee pointed out some inconsistencies in the
Agency's
brief, which allegedly caused confusion. However, we find that
the
mistakes were clerical in nature and not relevant to the issues
at
hand. Therefore, we do not repeat them here. It is clear that
the
Grantee understood the nature of the disallowance and was given
every
opportunity to respond fully to the Agency's arguments.
2. In the Board's conference call, the Board inquired
whether an
affidavit could be submitted to further bolster the document
submitted
by the Grantee. However, the Agency rejected this suggestion
because it
still questioned the listed cost of each item, as indicated in n.
3.
3. For example, the Agency noted that the CPA listed,
among other
things, 10 hours for the preparation of a letter at a cost of $60
per
hour, which totalled $600 for one letter.
4. While it is not clear that the original
$16,587 of in-kind
volunteer services represented only CPA services as the
Agency suggested
might be the case, the Grantee has not submitted any
documentation which
indicated that it received volunteer services from any
other source. In
the Grantee's notice of appeal, the Grantee stated
that it had received
an "additional $2,640 of in-kind for professional
services" from the
CPA. (Grantee's Notice of Appeal, p. 2)
5. The Grantee submitted two exhibits in its October
10, 1986
submission to support its position that the questioned travel by
its
employees was grant-related. Exhibit H is a one-page summary
entitled
"New York City Report, 3/22 thru 3/26 1985," submitted by Robert
V.
Bojorcas, OFA Executive Director. Additionally, attached to
this
summary is a list of foundations contacted by Robert V.
Bojorcas.
Exhibit H-1 is a one-page summary, also submitted by Mr.
Bojorcas,
entitled "Washington D.C. Trip, 3/17/85 thru