credit or with Treasury checks, each State agency shall submit the Report of Federal Cash Transactions prescribed by Attachment H of OMB Circular No. A-102 (HEW Forms 602T, 603T). This report will be used to monitor cash advanced to State agencies and to obtain disbursement or outlay information for each project from the State agencies. The format of the report may be adapted as appropriate when reporting is to be accomplished with the assistance of automatic data processing equipment, provided that the information to be submitted is not changed.

(b) Forecasts of Federal cash requirements. Forecasts of Federal cash requirements may be required in the "Remarks" section of the report.

(c) Cash in hands of secondary recipients. When deemed necessary and feasible by the Commissioner, State agencies may be required to report in the "Remarks" section of the report the amount of cash advances in excess of three days' requirements in the hands of subgrantees or other secondary recipients, and to provide short narrative explanations of actions taken by the State agencies to reduce the excess balances.

(d) Frequency and due date. State agencies shall submit the Report of Federal Cash Transactions no later than fifteen working days following the end of each quarter. However, where a letter of credit authorizes advances at an annualized rate of one million dollars or more, the Commissioner may require the reports to be submitted within fifteen working days following the end of each month.

(e) Waiver. The Commissioner may waive the requirement for submission of the Report of Federal Cash Transactions when a State agency's monthly advances do not exceed $10,000: Provided, That such advances are monitored through other forms authorized pursuant to this subpart, or the State agency's accounting controls are adequate to minimize excessive Federal advances.

(OMB Circular No. A-102, Attachment H.)

71

§ 100b.405 Request for advance or reimbursement.

(a) State agencies shall submit their requests for advance payments or reimbursements under nonconstruction grants, and their requests for advance payments under construction grants, on the Request for Advance or Reimbursement form prescribed by Attachment H of OMB Circular No. A-102 (HEW Form 604T) when letters of credit or predetermined automatic Treasury check advance methods are not used. Additionally, the Commissioner may prescribe this form for construction grants in lieu of the Outlay Report and Request for Reimbursement for Construction Programs as specified in § 100b.406.

(b) State agencies will be authorized to submit no less often than monthly their requests for advances or reimbursement when letters of credit or predetermined automatic Treasury check advance methods are not used. (OMB Circular No. A-102, Attachment H.)

§ 100b.406 Outlay report and request for reimbursement for construction pro

grams.

the

(a) Construction grants paid by reimbursement method. (1) Requests for reimbursement under construction grants shall be submitted on Outlay Report and Request for Reimbursement for Construction Programs form prescribed by Attachment H of OMB Circular No. A-102. The Commissioner may, however, substitute the Request for Advance or Reimbursement form specified in § 100b.405 in lieu of this form when he determines that the former provides adequate information to meet his needs.

(2) State agencies will be authorized to submit no less often than monthly their requests for reimbursement under construction grants.

(b) Construction grants paid by letter of credit or Treasury check advances. (1) When a construction grant is paid by letter of credit or Treasury check advances, the State agency shall report its outlays to the Commissioner using the Outlay Report and Request for Reimbursement for Construction Programs form prescribed by Attachment H of OMB Circular No. A-102. In

these cases, the State agency should leave blank those items on the form which are applicable only when requesting reimbursement, i.e., items 3, 5, 10, 11t, 11u, and 11v.

(2) In lieu of the certification and signatures in items 12, 12a, and 12b, the following certification, signed on behalf of the State agency by an authorized official of the State agency, shall be submitted to the Commissioner with the outlay report:

I certify that to the best of my knowledge and belief the accompanying report is correct and complete and that all outlays reported therein are for the purposes set forth in the Federal authorizing legislation. Information as to percentage of project completion and certification thereof by the Government representative shall be submitted independently of the outlay report, at such times and by such means as may be prescribed by the Commissioner.

(3) Frequency and due date of the Outlay Report and Request for Reimbursement for Construction Programs shall be governed by § 100b.403 (c) and (d).

(c) Accounting basis. The accounting basis for the Outlay Report and Request for Reimbursement for Construction Programs shall be governed by § 100b.403(b).

(d) Alternative forms. For construction grants paid by the reimbursement method, or by Treasury check advances based on periodic requests from the State agency, the Commissioner may substitute the Request for Advance or Reimbursement specified in § 100b.405 in lieu of the Outlay Report and Request for Reimbursement for Construction Programs. When any other payment method is used, the Commissioner may substitute the Financial Status Report specified in § 100b.403.

(OMB Circular No. A-102, Attachment H.) § 100b.407 Requests for supplementary Treasury checks.

When the drawing authority for a specified period under a letter of credit is insufficient, the State agency may request a supplementary Treasury check payment by letter.

(OMB Circular No. A-102, Attachment H.)

Subpart Q-Monitoring and Reporting of Program Performance

§ 100b.430 Scope of subpart.

This subpart sets forth the procedures for monitoring and reporting program performance. These procedures are designed to place greater reliance on State agencies to manage the day-to-day operations of their federally-supported activities.

(OMB Circular No. A-102, Attachment I.) § 100b.431 Monitoring by State agencies.

State agencies shall constantly monitor performance under federally-supported activities to assure that adequate progress is being made towards achieving the goals of the grant. This review shall be made for each function or activity of each grant as set forth in the approved State plan or application.

(OMB Circular No. A-102, Attachment I.) § 100b.432 Performance reports for nonconstruction grants.

(a) Where the Commissioner determines that performance information sufficient to meet his programmatic needs will be available from continuation or renewal applications, the Commissioner will require the State agency to submit a performance report only with the final Financial Status Report (or other financial report equivalent thereto). Note that the "Application for Federal Assistance (Nonconstruction Programs)" prescribed by Subpart C of this part, when used to request a continuation or renewal, provides information substantially equivalent to a performance report.

(b) Except as provided in paragraph (a) of this section, State agencies shall submit a performance report with each Financial Status Report (or other financial report equivalent thereto) in the frequency established by Subpart P of this part. The Commissioner will prescribe the frequency with which performance reports will be submitted with the Request for Advance or Reimbursement when that form is used in lieu of the Financial Status Report; in such cases, perform

ance reports will not be required more frequently than quarterly, or less frequently than annually.

(c) Performance reports shall include, to the extent appropriate to the particular grant, a brief presentation of the following for each function or activity involved:

(1) A comparison of actual accomplishments to the goals established for the period. Where the output of projects can be readily quantified, such quantitative data shall be related to cost data for computation of unit costs.

(2) Reasons for slippage in those cases where established goals were not met.

(3) Other pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs.

(OMB Circular No. A-102, Attachment I.)

§ 100b.433 Performance reports for construction grants.

In general, the Commissioner will rely heavily on on-site technical inspection and certified percentage-ofcompletion data to keep himself informed as to progress under construction grants. Therefore, formal performance reports from State agencies to supplement those sources of information will be required only if deemed necessary by the Commissioner and in no case more frequently than quarterly.

(OMB Circular No. A-102, Attachment I.)

occur

§ 100b.434 Significant developments between scheduled reporting dates. Between the scheduled performance reporting dates, events may which have significant impact upon the federally-supported activity. In such cases, the State agency shall inform the Commissioner as soon as the following types of conditions become known:

(a) Problems, delays, or adverse conditions which will materially impair the ability to attain the objectives of the grant. This disclosure shall be accompanied by a statement of the action taken, or contemplated, and any Federal assistance needed to resolve the situation.

§ 100b.477 Retention of records.

(a) Records. Each State agency and other recipient shall keep intact and accessible all records relating to the receipt and expenditure of Federal funds (and to the expenditure of the recipient's contribution to the cost of the project, if any) in accordance with section 434(a) of the General Education Provisions Act, including all accounting records and related original and supporting documents that substantiate direct and indirect costs charged to the award.

(b) Period of retention. (1) Except as provided in paragraphs (b)(2) and (d) of this section, the records specified in paragraph (a) of this section shall be retained for 3 years after the date of submission of the annual expenditure report to the State agency.

(2) Records for nonexpendable personal property which was acquired with Federal funds shall be retained for 3 years after its final disposition.

(c) Microfilm copies. Recipients may substitute microfilm copies in lieu of original records in meeting the requirements of this section.

(d) Audit questions. The records involved in any claim or expenditure which has been questioned by Federal audit shall be further retained until resolution of any such audit questions:

Provided, however, That records need not be retained if they relate to a grant or contract with respect to which actions by the United States to recover for diversion of Federal funds are barred by the statute of limitations in 28 U.S.C. 2415(b).

(e) Audit and examination. (1) The Secretary and the Comptroller General of the United States, or any of their duly authorized representatives, shall have access for the purpose of audit and examination to the records specified in paragraph (a) of this section and to any other pertinent books, documents, papers, and records of the recipient.

(2) In the case of a subgrant (or negotiated contract exceeding $2,500) the State agency, the Secretary, the Comptroller General of the United States, or any of their duly authorized representatives, shall have access to any books, documents, papers, and records of the subgrantee (or the contractor) which the State agency, the Secretary, the Comptroller General of the United States, or any of their duly authorized representatives determine are pertinent to the specific grant, for the purpose of making audit, examination, excerpts, and transcripts.

(f) Records for indirect cost rate proposals, etc.-(1) Applicability. This paragraph applies to records supporting (i) indirect cost rate proposals, (ii) cost allocation plans of State and local governments pursuant to Appendix B to the subchapter, (iii) hospital patient care rate proposals, and (iv) any similar accounting computations of the rate at which a particular group of costs is chargeable to a grant. Examples of the latter are computer usage chargeback rate computations and composite fringe benefit rate computations.

(2) If submitted to the Federal Government. If the proposal, plan, or other computation is required to be submitted to the Federal Government to form the basis for negotiation of the rate, then the three-year retention period for its supporting records starts from the date of such submission.

(3) If not submitted to the Federal Government. If the proposal, plan, or other computation is not required to be submitted to the Federal Govern

ment for negotiation purposes, then the three-year retention period for its supporting records starts from the end of the State agency's fiscal year (or other accounting period) covered by the proposal, plan, or other computation.

(20 U.S.C. 1232c(a); 28 U.S.C. 2415(b); OMB Circular No. A-102, Attachment C.)

§ 100b.481 Unexpended funds.

Whenever any portion of any allotment to any State has not been used in the State for the purpose provided for in the Federal statute, regulations, State plan, State application, or project application, with respect to that allotment, and has not been transferred to another allotment or reallotted to other States pursuant to law in the period during which such allotment is available, a sum equal to such portion may be deducted from the next payment of funds allotted to such State. (20 U.S.C. 1232d.)

§ 100b.482 Withholding of funds.

The approval of a State plan or State application, the approval of a grant, or the entering into of a contract or other arrangement, and any payment pursuant thereto, shall not be deemed to waive the right of the Commissioner to withhold funds by reason of the failure of the recipient to observe, either before or after such administrative action, any Federal requirements.

(20 U.S.C. 1221c(b)(1).)

§ 100b.483 Waiver of law prohibited.

No official, agent, or employee of the Office of Education of the Department of Health, Education, and Welfare shall have the authority to waive or alter any provision of the regulations in this chapter (except through amendment by publication in the FEDERAL REGISTER) or other relevant statute or regulation, and no action or failure to act on the part of such official, agent, or employee shall operate in derogation of the Commissioner's right to enforcement of said provisions in accordance with their terms. (43 Dec. Comp. Gen. 31 (1963).)

§ 100b.484 Federal audits.

The records of a recipient are subject to audit by the Federal Government to determine whether the recipient has properly accounted for Federal funds.

(20 U.S.C. 1232c(a)(2).)

§ 100b.494 Closeout.

(a) "Closeout" means the process by which the Commissioner determines that all applicable administrative actions and all required work of the grant have been completed by the State agency and the Commissioner.

(b) In closing out grants, the following shall be observed:

(1) Upon request, the Commissioner will make, or arrange for, prompt payment to the State agency for allowable reimbursable costs not covered by previous payments.

(2) The State agency shall immediately refund to the Federal Government, or otherwise dispose of in accordance with instructions from the Commissioner, any unencumbered balance of cash advanced to the State agency.

(3) The State agency shall submit, within 90 days after the date of completion of the grant, all financial, performance, and other reports required as a condition of the grant. The Commissioner may grant extensions when requested by the State agency.

(4) The Commissioner will make a settlement for any upward or downward adjustment of the Federal share of costs, to the extent called for by applicable statutes, regulations, or the terms and conditions of the grant.

(5) In the event a final audit has not been performed prior to the closeout of the grant, the Commissioner retains the right to recover an appropriate amount after fully considering the recommendations on disallowed costs resulting from the final audit.

(b) The provisions of Subpart L of this part shall be observed by the State agency in accounting for any property acquired with Federal funds, or received from the Federal Government in connection with the grant.

(OMB Circular No. A-102, Attachment L.)

Except as provided in § 100c.3, the provisions contained in this part are applicable to the Federal programs of assistance under the following authorities:

(a) Title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 241a);

(b) Title II of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 821);

(c) Title III of the Elementary and Secondary Education Act of 1965 (including sec. 306 thereof) (20 U.S.C. 841);

(c-1) Part C of Title IV of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 1831);

(d) Title VII of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 880d);

(e) Part B of the Education of the Handicapped Act (20 U.S.C. 1411);

(f) State vocational education programs under sections 101-150 of Part A of Title I of the Vocational Education Act of 1963, as amended (20 U.S.C. 2301-2380).

(f-1) Section 553 of the Education Professions Development Act (20

U.S.C. 1119c-2);

(g) The Follow Through program under section 222(a)(2) of the Economic Opportunity Act of 1964 (42 U.S.C. 2809(a)(2)).