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Uniform Grant Guidance and EDGAR 101: Allowable Costs

Tiffany Kesslar, Esq

tkesslar@bruman.com

www.bruman.com

March 2026

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Topics

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Intro to EDGAR and UGG

Allowability

Time and Effort

Financial Management

Procurement

Inventory Management

Record Keeping

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DEFINITIONS

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EDGAR and the UGG

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EDGAR (34 CFR Parts 74-99)

Direct Grant Programs – 34 CFR Part 75
State-Administered Programs – 34 CFR Part 76

UGG (2 CFR Part 200)

Subpart A – Acronyms and Definitions (p. 121)
Subpart B – General Provisions (p. 128)
Subpart C – Pre-Federal Award Requirements and Contents of Federal Awards (p. 131)
Subpart D – Post Federal Award Requirements (p. 136)
Subpart E – Cost Principles (p. 154)
Subpart F – Audit Requirements (p. 177)

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STATE OVERSIGHT AND PASS-THROUGH RESPONSIBILITIES

Responsibility for Subawards (200.332) P. 150-151

Subaward Information
Evaluate Subrecipient Risk
Specific Conditions (200.208) P. 134
Monitoring
Verify Subrecipient Has Single Audit; Management decisions
Enforcement (200.339) P. 152

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INTERNAL CONTROLS - 200.303 �(P. 137)

Compliance Supplement, Internal Controls: “Control activities are the policies and procedures that help ensure the management’s directives are carried out.”

Must have internal controls that:

Comply with requirements (Statutes, regs, program, grant notice, etc.)
Evaluate and monitor compliance
Take prompt action to correct noncompliance
Safeguard personally identifiable information (PII)

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MANDATORY REPORTING

Applicant, recipients, and subrecipients must promptly disclose whenever it has credible evidence of the commission a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations under Title 18 of the US Code or the Civil False Claims Act (31 U.S.C. 3729–3733)

Includes both criminal and civil false claims actions

Applies to any activities or subawards in connection with the Federal award

Must be made in writing to the Federal agency, the agency’s Office of Inspector General, and the pass-through entity (if applicable)

Failure to report can result in remedies for noncompliance (200.339)

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ALLOWABILITY�2 CFR 200.403�

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Basic Factors of Allowability - 200.403�(P. 155)

To be allowable, a cost must:

Be necessary, reasonable and allocable
Comply with the cost principles and Federal award
Be consistent with policies and procedures applying uniformly �to Federal and non-Federal activities and costs
Be consistently treated as either direct or indirect costs
Be determined in accordance with GAAP
Not be included or used to meet cost sharing / match requirements
Be adequately documented
Be incurred during approved budget period

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NECESSARY - 200.404�(P. 155)

A cost is “generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award.”

Ask:

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Is the cost included in your plan/grant application?

Is it aligned with the goals of the program/grant?

Does your agency have the capacity to use what you are purchasing?

Is the staff knowledgeable regarding the program?

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REASONABLE - 200.404�(P. 155)

“A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a reasonably prudent person under the circumstances prevailing at the time the decision was made to incur the cost.”

Prudent person standard

If it was on the front page of the newspaper, could you defend it?

Reasonableness is focused on the cost

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ALLOCABLE - 200.405�(P. 155)

A cost is allocable to a Federal award or cost objective if the goods or services involved are chargeable or assignable in accordance with relative benefits received.

Ask:

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Was it incurred specifically for the award?

If it benefits both award and other work, can the cost be distributed in proportions that may be approximated using reasonable methods?

Is it necessary to the overall operation of the entity and assignable to the award in accordance with this subpart?

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SELECTED ITEMS OF COST EXAMPLES

Advertising/Public Relations - 200.421 (P. 159)

Allowable for programmatic purposes including:

Recruitment
Procurement of goods
Disposal of materials
Program outreach
Public relations (in limited circumstances)

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SELECTED ITEMS OF COST EXAMPLES (CONT.)

Alcohol - 200.423 (p. 159) - Not allowable

Conferences – 200.432 (p. 164-165)

Allowable conference costs include rental of facilities, costs of meals and refreshments, transportation, unless restricted by the Federal award
Conference hosts must exercise discretion in ensuring costs are appropriate, necessary, and managed in a manner that minimizes costs to Federal award

Entertainment - 200.438 (p. 167)

Not allowable UNLESS prior written approval of Federal awarding agency.
May be allowed where: Clear programmatic purpose, and are authorized by the Federal awarding agency

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Selected Items of Cost Examples (Cont)

Food

Updated Guidance

“Generally, a grantee needs to substantiate with specificity the rationale for why paying for food and beverages. . . is necessary to meet the goals and objectives of a grant. When a grantee is hosting an event. . . the grantee should first consider structuring the agenda for the meeting so that there is time for participants to bring or purchase their own food, beverages, and snacks. . .

Because food and beverage costs are not of a type generally recognized as ordinary and necessary for the operation of the grantee or the proper and efficient performance of the Federal award. . . grantees must document their evidence and analysis that justify that the use of food or beverage is reasonable and necessary in each instance.”

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SELECTED ITEMS OF COST EXAMPLES (CONT.)

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Allowable and Unallowable Food Examples

May be allowable:

Food costs for a working lunch at a day-long meeting
Food costs at a family engagement event
Costs of light snacks at a day-long meeting
Costs of light snacks at a day-long meeting

Unallowable:

Costs for food at networking meetings
Food costs for remote meetings
Food costs for regular staff meetings

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TRAVEL - 200.475 (P. 176-177)

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Travel costs may be charged on actual, per diem, or mileage basis

Travel charges must be consistent with entity’s written travel reimbursement policies

Allows costs for “above and beyond regular dependent care”

Grantee must retain documentation that participation of individual is necessary for the project

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TIME AND EFFORT�2 CFR 200.430�

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Time and Effort Documentation 200.430(i)(1) & (4)� (P. 160-161)

Time and effort must be collected for all employees (not contractors) whose salaries are:

Paid in whole or in part with federal funds; and

Used to meet a match/cost share requirement

Includes:

Full time and part time employees

Federal stipends that are considered salary expenses

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Time and Effort Records Must”

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Time and effort records MUST:

Be supported by a system of internal controls which provides reasonable assurance charges are accurate, allowable and allocable;
Be incorporated into official records;
Reasonably reflect total activity for which employee is compensated;
Encompass all activities (Federal and non-Federal);
Comply with established accounting polices and practices; and
Support distribution among specific activities or cost objectives.

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SUPPORTED BY A SYSTEM OF INTERNAL CONTROLS

What are the best controls?

Anything that will go towards the veracity and accuracy of documentation supporting salaries
Verifiable documentation

Signatures (not required, but a good control)
Documentation from person with first-hand knowledge

T&E Policies & Procedures - 200.430(a)

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TRACK TIME BY COST OBJECTIVE

Cost Objective (200.1)

Program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired …
Examples: set-asides, mandatory spending caps, etc.

Title I, A

Parent and family engagement
Equitable services
Admin, etc.

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RECONCILIATION - 200.430(g)(1)(vii)(C)�(P. 161)

All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.
Cannot overcharge the Federal program!

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NONCOMPLIANCE - 200.430(g)(8) (P. 161)

If you’re noncompliant, ED may require personnel activity reports (PARs), including prescribed certifications or equivalent documentation that support the records!
Generally require a repayment of funds!

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FINANCIAL MANAGEMENT�2 CFR 200.302

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PERIOD OF PERFORMANCE - 200.1�(P. 126)

“The total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award … does not commit the awarding agency to fund the award beyond the currently approved budget period.”

Financial Obligations - 200.1(P. 123)

“…when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment.”

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WHEN THINGS OBLIGATE

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34 CFR 76.707 (P. 69)

If the obligation is for -	The obligation is made -
Acquisition of real or personal property	On the date on which the State or subgrantee makes a binding written commitment to acquire the property
Personal services by an employee	When the services are performed
Personal services by a contractor	On the date on which the State or subgrantee makes a binding written commitment to obtain the services
Performance of work other than personal services	On the date on which the State or subgrantee makes a binding written commitment to obtain the work
Travel	When the travel is taken

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CARRYOVER (TYDINGS AMENDMENT) AND CLOSEOUT – 200.344 (P. 153-154)

Carryover

GEPA Sec. 421(b) and 34 CFR 76.709-710
Program restrictions, ESSA Sec. 1126(c) (limits TI-A carryover to 15%); Perkins V, Sec. 133(b) (requires states to redistribute unobligated balances at the end of academic year; no carryover at local level)

Closeout

Subrecipients must prepare closeout reports and final accounting within 90 days after period; pass-through entities have 120 days

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FINANCIAL MANAGEMENT - 200.302 �(P. 137)

States – follow their own rules! Everyone else – seven standards:

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Identification of Awards

Financial Reporting

Accounting Records

Internal Controls

Budget Control

Written Procedures for Cash Management

Written Procedures for Determining Allowability

General rule is that states tend to follow their own rules and everyone else has more specific requirements. True for financial management, inventory, procurement, etc. Talks about the 7 standards that must be met for school districts. Page 130. These standards have not changed much since we first saw the UGG. Still identify federal awards in accounts; accounting records must include source documentation - expectation in part that SEAs do some review of supporting documentation; policies and procedures, self assessment, compliance checks, sign offs by supervisors = internal controls; routine assessment of spending, whether it is in accordance with budget; written procedures – often low hanging fruit for auditors and monitors. Probably need to review and update P&P given citation changes.

afaibca

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FEDERAL PAYMENT - 200.305(b)�(P. 137-138)

Written procedures must describe whether non-Federal entity uses:

Advance Payments

Limited to minimum amounts needed to meet immediate cash needs
Subject to cash management requirements

Reimbursements

Pass-throughs must make payment within 30 calendar days after receipt of the billing
Initial payments made with state/local funds

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CASH MANAGEMENT - 200.305 (a) and (b)�(P. 137-138)

For non-Federal entities, payments must minimize time elapsing between draw down and disbursement (not obligation)

Cash advances must be maintained in insured accounts

Accounts must be interest-bearing unless:

Aggregate Federal awards under $120,000

Account not expected to earn in excess of $500 per year

Bank requires minimum balance so high, that such account is not feasible

Interest earned must be remitted annually to HHS Payment Management System
Interest amounts up to $500 may be retained by non-Federal entity for administrative purposes

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PROCUREMENT�2 CFR 200.317-327�

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COMPETITION - 200.319�(PP. 145)

All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition
Must have procedures that ensure contracts are fully performed before payment

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Bid/

Quote

Purchase Order or Requisition

Invoice

(Proof of Performance)

Payment

Reimbursement Request

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METHODS OF PROCUREMENT 200.320 �(PP. 145-147)

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Informal procurement methods

Micro-purchase
Small purchases

Formal procurement methods

Competitive sealed bids
Competitive proposals

Noncompetitive proposals

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INFORMAL PROCUREMENT: MICRO-PURCHASES - 200.320(a)(1) (P. 146)

Threshold in FAR is $15,000

However, threshold is determined and documented by grantee, based on internal controls, risk, and procedures

Check state and local laws

Non-Federal entity may self-certify threshold up to $50,000, if:

Low-risk auditee for most recent audit (200.520)
Annual internal institutional risk assessment to identify, mitigate and manage financial risks or
For public institutions, a higher threshold consistent with state law

Over $50,000, must have approval of cognizant agency indirect costs

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INFORMAL PROCUREMENT: �MICRO-PURCHASES - 200.320(a)(1) (P. 146)

Distribution: “To the maximum extent practicable, the non-Federal entity should distribute … among qualified suppliers.”
Awards may be awarded without price or rate quotes if non-Federal entity “considers the price to be reasonable based on research, experience, purchase history or other information and documents its files accordingly.”

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INFORMAL PROCUREMENT: �SMALL PURCHASES - 200.320(a)(2) (P. 146)

Used when for purchases greater than micro-purchase threshold, but less than simplified acquisition threshold ($350,000)

May be lowered – check state and local rules

Price or rate quotations from “adequate number of qualified sources” as determined appropriate by non-Federal entity

Has to be more than one, but could be as low as two

Should have documentation!

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FORMAL PROCUREMENT - 200.320(b)�(P. 146-147)

Used for purchases that exceed small purchase threshold ($350,000, or lower, if set by the non-Federal entity)

Require documented procedures
Require public advertising
Two options:

Sealed bids and
Proposals

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NONCOMPETITIVE PROPOSALS - 200.320(c)�(P. 147)

Appropriate only when:

Micro-purchases

The item is only available from a single source

There is a public emergency for the requirement that will not permit delay resulting from publicizing a competitive solicitation

Note the time element of this exception!

The Federal awarding agency or pass-through expressly authorizes noncompetitive procurement in response to a written request from non-Federal entity or

After soliciting a number of sources, competition is determined inadequate

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DOMESTIC PREFERENCES FOR PROCUREMENTS - 200.322 (P. 147)

“To the greatest extent practicable” must provide a preference for the purchase of goods and materials produced in the U.S.

Only to the greatest extent practicable

What does “produced in the United States” mean?

Iron/Steel—initial melting stage through application of coatings

Manufactured products– items and materials composed in whole or in part of non-ferrous metals (aluminum, plastics, polymer products)

Must include this section in all subawards, contracts, and purchase orders

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CONFLICT OF INTEREST - 200.318(c)(1) �(P. 144)

Must maintain written standards of conduct, including conflict of interest policy
A conflict of interest arises when any of the following has a financial or other interest in the firm selected for award:

Employee, officer, or agent

Any member of that person’s immediate family

That person’s partner

An organization which employs, or is about to employ, any of the above or has a financial interest in the firm selected for award

Organizational Conflict (applies to non-gov. entities)

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CONFLICT OF INTEREST - 200.318(c)(1)�(P. 144)

Cannot solicit nor accept gratuities, favors, or anything of monetary value from contractors/ subcontractors
However, may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value
Standards of conduct must include disciplinary actions for violations

Common area that is missing from policies and procedures!

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SUSPENSION AND DEBARMENT - 200.214 (P. 135); 180.300; 200.216 (PP. 136)

You must verify that the person with whom you intend to do business is not excluded or disqualified.

For contracts over $25,000, and
For all contracts for telecommunications and video surveillance services or equipment (200.471).

This MUST be done by either:

Checking SAM.gov
Collecting a certification from that person
Adding a clause or condition to the covered transaction with that person

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INVENTORY MANAGEMENT�2 CFR 200.313�

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DEFINITIONS - 200.1

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Equipment: tangible, non-expendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit

Supplies: All tangible personal property other than equipment

Computing Devices: If less than $5,000 per unit, defined as supplies

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INVENTORY PROCEDURES - 200.313(d)�(P. 142-143)

Property records

Description, serial number or other ID, source of funding, title, acquisition date and cost, percent of Federal participation, location, use and condition, and ultimate disposition date including sale price

Physical inventory at least every two years

Control system to prevent loss, damage, theft

All incidents must be investigated

Adequate maintenance procedures

If authorized or required to sell property, proper sales procedures to ensure highest possible return

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USE OF EQUIPMENT - 200.313(c)�(P. 142)

Equipment must be used by the non-Federal entity in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award.

Equipment must be available for shared use, provided such use will not interfere with work on the original projects/programs, and it follows this order of priority:

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First by other programs from same agency

Then open to other Federal programs

Non-Federal programs

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EQUIPMENT DISPOSITION - 200.313(c)(1) & (e) (P. 142-143)

May use sale price of old equipment towards purchase price of replacement equipment - 200.313(c)(4)

When property is no longer needed in any current or previously Federally-funded supported activity, must follow disposition rules:

Fair market value > $5,000 = pay Federal share back to awarding agency

Fair market value of $5,000 = no money owed back to feds

Supplies (200.314): Depends on value of residual inventory of unused supplies

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SUPPLY DISPOSITION – 200.314 �(P. 143)

If there is a residual inventory of unused supplies at the end of the period of performance exceeding $10,000 in total aggregate value, and the supplies are not needed for any other Federal award, the State or LEA may retain or sell the supplies

Unused supplies means supplies that are in new condition, not having been used or opened before. The aggregate value of unused supplies consists of all supply types, not just like-item supplies

Fair market value more than $10,000 (aggregate) = pay Federal share back to federal agency or pass-through entity

May retain $1,000 to cover expenses associated with the selling/handling of the supplies.

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RECORD RETENTION�2 CFR 200.334�

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RECORD RETENTION – 200.334 �(P. 151)

How long do we have to keep our records?

UGG requires at least three years BUT… watch applicable Statute of Limitations!

(Example, USDE = 5 years under the General Education Provisions Act) 34 CFR 81.31(c) (P. 83)

When original records are electronic and cannot be altered, there is no need to create and retain paper copies. (200.336 (P. 151))

When original records are paper, electronic versions may be substituted provided they:

Are subject to periodic quality control reviews
Provide reasonable safeguards against alteration
Remain readable

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Questions?

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LEGAL DISCLAIMER

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This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with The Bruman Group, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at The Bruman Group, PLLC does not create an attorney-client relationship with The Bruman Group, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.