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Origination Date 6/15/03 The following information is a brief overview of items to consider as you incur expenditures intended to be reimbursed by the ND Department of Human Services(DHS). In most instances we have identified the OMB Circular or Common Rule that will provide you with additional information and guidance in these critical areas. Let's first look at what your organization is required to maintain as support when grant funds are used to cover all or a portion of your expenditures. The Common Rule Subpart C ~_.20(b) Identifies several items which must be provided by a subrecipient's Financial Management Systems: . Financial Reporting: Provide accurate, current, and complete disclosure of the financial results of each federally sponsored project or program. . Accounting Records: Contain records that identify adequately where the funds came from and how the funds were used for federally sponsored activities. . Internal Control: Protect all funds, property, and other assets from theft or misuse. . Budget Control: Comparison of outlays with budget amounts for each award. . Allowable cost: Written procedures for determining the reasonableness, allocability, and allowability of costs in accordance with the conditions of the award. . Sourc~ Documentation: Accounting records must be supported by such source documentation as cancelled checks, paid bills, time and attendance records, contract and subgrant award documents, etc. Although the circulars list cancelled checks as a form of source documentation, DHS does not feel that a cancelled check alone represents "adequate supporting documentation." Supporting documentation should answer four Critical questions: What was purchased and/or the purpose? Who was it purchased from? When was it purchased? How much was paid for it? Ledger sheets, credit card statements, and cancelled checks represent source documentation and often identifying who, when, and how much was paid, but they often fail to identify what was purchased. Thus none of these items in and of themselves qualify as adequate supporting documentation. DHS requires that expenditures, submitted for reimbursement, be supported by original receipts. 2