Improved Standards Needed for Managing and Reporting Income Generated Under Federal Assistance Programs

GGD-83-55: Published: Jul 22, 1983. Publicly Released: Jul 22, 1983.

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GAO reviewed federal agencies' and grantees' policies and practices for managing and reporting income generated under federally assisted programs.

GAO found that a number of federal agencies have not established regulations conforming to the Office of Management and Budget's (OMB) grant-related income standards or are not adequately implementing their grant-related income regulations. GAO also found that the OMB standards do not address all grant-related income issues and the income reporting requirements are not clear. As a result, the objectives which the income standards sought to attain, such as using the income to increase the size of federally assisted programs or to reduce the federal government's and grantees' share of program costs, were not always being attained.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Federal agencies' rules adequately address this recommendation.

    Recommendation: The Director, OMB, should revise Circulars A-102 and A-110 to incorporate in the standards a statement that federal agencies should specify in their regulations which program income option is to be used by grantees when grant agreements fail to specify an option.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Closed - Implemented

    Comments: Federal agencies' rules adequately address this recommendation.

    Recommendation: The Director, OMB, should revise Circulars A-102 and A-110 to expand the description of the deductive option to note that its objective of reduced costs to the government will not be achieved unless total grantee expenditures are limited to the budgeted amount approved in the grant award.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Implemented

    Comments: Federal agencies' rules adequately address this recommendation.

    Recommendation: The Director, OMB, should revise Circulars A-102 and A-110 to establish standards addressing the timing and allowability of program income expenditures and the classification of income derived from products of the land such as oil, gas, minerals, gravel, and standing timber.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  4. Status: Closed - Implemented

    Comments: OMB established clear standards, such as interest earned on program income, but not as clear on the other two situations. OMB maintains that the standards do cover the other two situations. Given the OMB word on this, GAO should not pursue further at this time.

    Recommendation: The Director, OMB, should revise Circulars A-102 and A-110 to establish standards for the disposition of interest earned on: (1) program income; (2) funds not pending disbursement because of completed projects, audit exceptions, or contract settlements; and (3) sales proceeds.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  5. Status: Closed - Implemented

    Comments: OMB expanded the definition of program income, but not as broad as recommended. Financial reporting forms were also expanded considerably, but again, not as broad as recommended. Given that OMB has acted on the bulk of this recommendation, GAO should not pursue the few remaining issues.

    Recommendation: The Director, OMB, should revise Circulars A-102 and A-110 to expand the definition of program income and the financial reporting requirements to ensure that all income generated under federally assisted projects, including interest and sales proceeds, is accounted for and reported by assistance recipients.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  6. Status: Closed - Implemented

    Comments: OMB did not revise the forms, but included new rules that have the effect GAO desired.

    Recommendation: The Director, OMB, should revise Circulars A-102 and A-110 to clarify in the instructions for Standard Forms 270 and 272, that all income retained by grantees is to be subtracted on their requests for drawdowns.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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