STARS Federal projects are units of effort related to specific Federal grants or contracts. Each individual Federal grant constitutes a special accounting and reporting entity for which all expenditures and revenues are accumulated as a by-product of the normal accounting process.
In 1990, the United States Congress passed the Federal Cash Management Improvement Act. This Act is designed to ensure the fair and timely exchange of funds between the Federal government and the states. The Act requires the exchange of interest where transfers are not made in a timely manner.
Interest must be paid for all programs defined as major under the Federal Single Audit Act. Each fiscal year, the State signs a new agreement with the Federal government governing specific accounting and computational procedures to comply with the CMIA.
The Federal Single Audit Act of 1984 requires the State to audit all Federal funds for which State agencies are responsible. After several years of conducting "single audits" on an agency-by-agency basis, the State Auditor performed the first statewide single audit for the 1989-90 fiscal year. Certain STARS modifications have been implemented that provide accounting and reporting by individual STARS Federal project numbers.
Objectives of the State's centralized Federal grant/contract management systems include the following:
- To provide centralized information for informed decision-making to State agency officials as well as to the State's management and budget officials. For example, officials need reports that allow them to monitor Federal revenue attainments to assure that Federal funds are being collected appropriately.
- To comply with the Federal Single Audit Act of 1984.
- To comply with the Federal Cash Management Improvement Act of 1990 and to minimize the interest liability payable to the Federal government under that Act.
- To ensure that agencies, before accepting Federal assistance, receive the approval of appropriate State officials.
- To help State agencies, particularly those that do not have sophisticated accounting systems of their own, to comply with Federal requirements associated with specific grants.
Because ultimate users of the grants/contracts management systems include officials of individual State agencies, Statewide officials, and Federal officials, an objective of the State's systems is to provide centralized reporting of Federal grants and contracts by State agency, by individual grant and contract, and by Federal agency and program.
ORGANIZATIONAL RESPONSIBILITY
Rather than maintaining a single grants/contracts management system, South Carolina maintains several inter-related centralized systems that together accomplish the goals set forth in the Introduction of this section. A detailed description of these systems is beyond the scope of this document. The remainder of this section, however, briefly outlines the roles of various State offices in maintaining these systems.
The information in this and the following several sections concentrates on those policies and procedures that directly affect the Comptroller General's Office and the STARS accounting system. It is not intended that the STARS Agency User's Manual will include everything agencies need to know about policies, forms, and procedures related to Federal funds. Agencies should contact the other offices mentioned for more details about these matters.
Ultimate responsibility for the management of Federal funds rests with the individual State agencies. Each State agency is responsible for:
- Maintaining the detail necessary to properly manage its Federal funds.
- Preparing monthly reconciliations between the CSA 467CM report (Trial Balance by Subfund, Project, and GLA) and the agency records for each project and phase code. See Error Correction Section - Error Detection Process - Indirectly Detectable Errors for further instructions.
- Meeting the Federal reporting requirements associated with each of its grants and contracts.
- Ensuring the accuracy, completeness, and timely submission of:
All documents relating to Federal grants and contracts required to be submitted to the various offices of State government.
All accounting transactions submitted for processing in STARS (including, but not limited to, use of the proper STARS Federal project number).
Revisions and corrections to STARS Federal grant titles and Catalog of Federal Domestic Assistance (CFDA) Numbers as necessary. See Completing the D38 Federal Grant Maintenance Form for detailed instructions.
Deletions of STARS Federal project numbers when a grant/contract has been closed and the STARS project's account balances have reached zero. See Completing the D38 Federal Grant Maintenance Form for detailed instructions.
- Requesting the Comptroller General's Office to establish new STARS subfunds when necessary to properly account for Federal funds.
- Collecting the maximum allowable indirect cost for grants and contracts to which indirect cost applies and depositing these amounts directly into (or remitting them on a timely basis to) the State General Fund. See Indirect Cost Recoveries undrer Using Federal Subfunds in this section.
- Ensuring that expenditures for each STARS Federal project do not exceed the total amount for the grant as authorized by the Division of Budget and Analyses of the Budget and Control Board.
The Division of Budget and Analyses requires that agencies complete certain forms and provide certain information and documentation:
- Before submitting a proposal to a Federal agency.
- When receiving notification from a Federal agency that a grant or contract has been approved (for a new or continuing Federal project). Agency responsibilities in this case include (but are not necessarily limited to) completion of the designated portions of "D38 Federal Grant Maintenance Form" (Form PRO'D38C.PM4) and submission to the Division of Budget and Analyses. See Completing the D38 Federal Grant Maintenance Form for instructions. After receipt of a properly completed "D38 Federal Grant Maintenance Form," which must include a copy of the grant award document and a copy of the GS-5, the Division of Budget and Analyses will assign a new STARS Federal project number to each grant.
- When preparing the agency's annual budget (under the Federal Project Review (FPR) System).
- Before receiving or expending Federal funds not budgeted in the Annual Appropriation Act (under the Grants and Contracts Review (GCR) System). Agency responsibilities in this case include (but are not necessarily limited to) submission of a Form BD100 ("Adjustments to Expenditure Authorization/ Appropriation and Estimated Revenue as Established in Current Fiscal Year Appropriation Act") to the Division of Budget and Analyses. This BD100 establishes the final budget representing the actual award.
Agencies may not deposit or expend Federal monies in STARS before the Division of Budget and Analyses assigns a STARS Federal project number.
Under the State's "Federal and Other Funds Oversight Act" (Act 651 of 1978 as amended), the Division of Budget and Analyses must:
- Review all State agency applications for Federal funds prior to agency submission of these applications to the grantor agency.
- Review all aspects of the program.
- Confirm that the maximum allowable indirect costs (for remittance to the General Fund) have been budgeted in accordance with one or more of the following:
The provisions of the State's "Federal and Other Funds Oversight Act."
The agency's negotiated indirect cost rate.
Applicable Federal program regulations.
- Identify specific sources of matching funds, if any.
- Assess the proposed project's long-term prospects and the possibility of program continuation.
In addition, the Division of Budget and Analyses gathers information concerning the status of current ongoing grants and completed grants in order to:
- Place current grants in perspective and to assess the reliability of agency funding estimates.
- Accurately assess project compliance with Federal and State laws and regulations.
Inception-to-date information required for these evaluations includes:
- Budgetary data on each grant, including estimated Federal support and State matching monies by fund source.
- Actual Federal Funds, State General Funds, and Other Funds applied to the grant.
The Division of Budget and Analyses evaluates inception-to-date data rather than State fiscal year data because some grants extend for several years. Also, the Federal fiscal year ends on September 30 whereas the State fiscal year ends on June 30.
Staff of the Division of Budget and Analyses assign a STARS project number to each approved Federal grant and contract by completing the designated fields on the "D38 Federal Grant Maintenance Form" (Form PRO'D38C.PM4). Also see Stars Project and Phase Codes.
The Division of Budget and Analyses uses data from STARS in reviewing agency budget requests that include Federal funds. In addition, the Division of Budget and Analyses reviews the following completed documents relating to Federal grants and contracts:
- STARS Appropriation Transfer Forms (Form 30).
- Forms BD100 ("Adjustments to Expenditure Authorization/ Appropriation and Estimated Revenue as Established in Current Fiscal Year Appropriation Act").
The Division of Budget and Analyses approves these documents deemed appropriate.
The State Treasurer's Office is responsible for computing and paying any liability owed to the Federal government under the CMIA. In addition, the State Treasurer's Office processes receipts of all cash including cash receipts associated with Federal grants and contracts.
The Comptroller General's Office is responsible for:
- Maintaining the Statewide Accounting and Reporting System (STARS), including those portions that provide accounting and reporting by individual STARS Federal project number. This includes:
Completing designated fields of the "D38 Federal Grant Maintenance Form" (Form PRO'D38C.PM4) and entering all data from that completed form into the STARS Project and Grants Table (also known as the D38 Table).
Preparing and processing journal vouchers to record adjustments to authorizations and to estimated revenues as indicated on approved Forms BD100 ("Adjustments to Expenditure Authorization/Appropriation and Estimated Revenue as Established in Current Fiscal Year Appropriation Act").
Processing STARS transactions.
- Providing STARS reports, including those displaying:
Balances by Federal project and phase for use by agencies and by auditors during the Statewide single audit.
Special data needed by the Governor's Office.
USING FEDERAL SUBFUNDS
Under the Federal Cash Management Improvement Act of 1990 (CMIA), the State must pay interest on certain cash balances in Federal (5XXX) subfunds. Therefore, we must maintain non-Federal cash in non-Federal subfunds AT ALL TIMES to prevent the State from paying interest it does not owe. Accordingly, agencies should comply with the following policies in accounting for Federal funds:
The State does not owe interest under the CMIA on Federal grant monies intended to be recovered as indirect cost by the State General Fund. It is important, therefore, that indirect cost not be accounted for within Federal (5XXX) subfunds on a regular basis. If you deposit indirect cost monies into Federal subfunds, you must immediately transfer those monies to the proper non-Federal subfund. See STARS Agency User's Manual, Document Prepartion Section for an example of an Appropriation/Cash Transfer document that transfers indirect cost recoveries from a Federal subfund to the General Fund. Agencies are strongly encouraged to develop procedures to deposit indirect cost monies directly into non-Federal subfunds.
Under the State's "Federal and Other Funds Oversight Act," the Division of Budget and Analyses determines which grants must pay indirect cost. If the Division of Budget and Analyses has so determined, then you must remit indirect cost--regardless of whether the grant or contract is accounted for within a Federal or non-Federal subfund. Please call the Division of Budget and Analyses if you have any questions concerning your agency's indirect cost collection and remittance process.
Some agencies participate in certain Federal grants on a matching or cost-sharing basis. To prevent the State from overpaying interest under the CMIA, account for all balances related to matching funds in non-Federal subfunds (i.e., subfunds other than 5XXX).
Before July 1, 1992, agencies recorded interfund loans to provide "front-end financing" for reimbursement grants. Such interfund loans, however, moved non-Federal cash into Federal (5XXX) subfunds. To prevent the State from paying interest it does not owe, 5XXX (Federal) subfunds may not participate in "front-end loans" (see Short - Term Interfund Loan - Temporary Financing of Grants). Instead, STARS allows Federal projects to maintain negative cash balances pending receipt of funds from the Federal government.
For purposes of the CMIA and the Single Audit Act, all Medicaid funds received from the State Health and Human Services Finance Commission (HHSFC) should be recorded and accounted for in a separate Earmarked subfund--not a Federal subfund. When recording the receipt of Medicaid funds from the State HHSFC, please consistently use STARS Revenue Object 3901 (Medicaid and Medicare Reimbursements). See STARS Revenue Object Codes Section for a definition of this revenue object code.
Contact the Central State Accounting Division of the Comptroller General's Office if you need to establish a subfund to properly account for Medicaid funds.
STARS PROJECT AND PHASE CODES
Agencies must request a separate project number for each Federal grant or contract. The State can comply with the Federal Cash Management Improvement Act and Single Audit provisions (see Federal Grants, Introduction) only if grants or contracts with different Catalog of Federal Domestic Assistance (CFDA) numbers have different STARS project numbers. If your agency needs to establish additional STARS project numbers, please contact the Division of Budget and Analyses of the Budget and Control Board.
Edits in STARS require that agencies enter a valid STARS Project and Phase Code on each STARS transaction that posts to a Federal (5XXX) subfund. STARS will prevent an input document from posting to a 5XXX subfund if it contains all zeroes or blanks in the Project and Phase fields.
For Federal grants and contracts, the four-digit STARS Project Code is a number between 0001 and 5999 assigned by the Division of Budget and Analyses when the "D38 Federal Grant Maintenance Form" (Form PRO'D38C.PM4) is completed.
STARS Project Codes between 6000 and 9999 represent permanent improvement projects within the Statewide Permanent Improvement Reporting System (SPIRS). The Budget and Control Board assigns those numbers.
The two-digit STARS Phase Code consists of the following two subfields:
- The one-digit Federal Funding Fiscal Year (FFFY) subfield consists of the last digit of the Federal Funding Fiscal Year for which the Federal grant or contract was awarded. To comply with Single Audit requirements (see Statewide Single Audit under Introduction of Section), IT IS IMPORTANT THAT AGENCIES USE THE CORRECT FFFY CODE ON EACH STARS TRANSACTION THAT RELATES TO A FEDERAL GRANT OR CONTRACT.
- The one-digit Cross-Reference Indicator (XREF) subfield is used as follows:
When used with a Federal grant or contract number (0001 through 5999), a Cross-Reference Indicator between 1 and 9 indicates that the grant or contract funds one or more permanent improvement projects.
When used with a permanent improvement project number (6000 through 9999), a Cross-Reference Indicator between 1 and 9 indicates that the permanent improvement project is funded by one or more Federal grants or contracts.
The Central State Accounting Division of the Comptroller General's Office assigns the Cross-Reference Indicator when applicable. Otherwise it is zero.
Example 1: Suppose your agency received a Federal grant for the 1992 Federal Funding Fiscal Year and the Division of Budget and Analyses assigned the STARS Project Code 4060 to this grant. Suppose further that this grant is not related to any permanent improvement projects. Then all STARS documents for this grant would be coded with the STARS Project and Phase 406020.
Example 2: Suppose your agency received a Federal grant for the 1992 Federal Funding Fiscal Year and the Division of Budget and Analyses assigned the STARS Project Code 4067 to this grant. Suppose further that this grant will finance SPIRS permanent improvement projects 7010 and 7011 as well as other expenditures not related to permanent improvement projects. Suppose even further that the Central State Accounting Division of the Comptroller General's Office has assigned Cross-Reference Indicators as follows for Federal Project 4067:
1 = Permanent Improvement Project 7010
2 = Permanent Improvement Project 7011
Then:
- Project/Phase 406720 would be used on STARS documents relating to grant 4067 but not related to permanent improvement projects.
- Project/Phase 406721 would be used on STARS documents relating to grant 4067's involvement with Permanent Improvement Project 7010.
- Project/Phase 406722 would be used on STARS documents relating to grant 4067's involvement with Permanent Improvement Project 7011.
THE D38 FEDERAL GRANT MAINTENANCE FORM
COMPLETING THE D38 FEDERAL GRANT MAINTENANCE FORM
Complete this form and submit the original and two copies to the Division of Budget and Analyses whenever:
- Your agency receives a new Federal grant or contract award.
- A change occurs or a correction is needed to data previously submitted. Changes are defined as:
An increase in grant/contract funding above the level previously authorized by the Division of Budget and Analyses.
A change in the original grant/contract period beyond that previously authorized.
The renewal of an existing grant/contract.
The change in a Catalog of Federal Domestic Assistance Program Number.
- A grant/contract has been phased out and the STARS project's account balances have reached zero.
Use a separate line for each grant/contract. When adding new grants or contracts, leave all shaded areas blank.
Complete the form carefully. YOU ARE RESPONSIBLE FOR THE ACCURACY AND COMPLETENESS OF THE DATA YOU ENTER. IT WILL BE SUBJECT TO AUDIT DURING THE STATEWIDE SINGLE AUDIT.
REF EXPLANATION