Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
SUBJECT: LAU-FAY-TON Community
DATE: January 19, 1990
Action Agency Docket No. 89-126
Audit Control No. A-04-89-08200
Decision No. 1126
DECISION
The LAU-FAY-TON Community Action Agency (Grantee) appealed a decision of
the Office of Human Development Services (OHDS) to disallow $4,904 of
costs charged to the Grantee's Head Start grant for the program years
ending June 30, 1986 and June 30, 1987. The disallowance was based on
the Agency's determination that Grantee's travel costs were inadequately
documented because: (1) there were no travel claims on file; (2) travel
advances were not reconciled to actual expenses; (3) there were no
mileage logs on file; (4) there were no invoices on file; or (4)
applicable credits were not used to reduce expenditures.
Background
Grantee appealed the disallowance on the basis that it was able to
provide acceptable documentation for the questioned travel costs.
Grantee first submitted bills which OHDS found adequate to support
expenditures of $673.81, and OHDS reduced the disallowance accordingly.
With respect to the remaining costs, OHDS rejected the Grantee's
documentation as inadequate. OHDS stated its specific reason for
rejecting each remaining cost.
The parties subsequently agreed, in a telephone conference call, that
Grantee would have the opportunity to produce further documentation of
the repayment of cash advances, and of mileage travelled and Grantee's
policy on mileage. The Grantee submitted documentation which the Agency
found sufficient to support an additional $1,926.19 in questioned costs,
thereby reducing the disallowance to $2,304. OHDS rejected as adequate
documentation a hotel bill in the amount of $166.56, since Grantee had
not connected this bill with any check drawn on the Head Start grant and
OHDS was unable to identify any questioned amount to which the bill
related.
Analysis
Under applicable requirements in 45 C.F.R. Part 74 (1985-1987), Grantee
was required to maintain accounting records adequately identifying the
source and application of funds and to support those records with source
documentation such as cancelled checks and paid bills. Sections
74.61(b) and (g). Moreover, section 74.174 provides that the principles
to be used in determining allowable costs for Department of Health and
Human Services grants to nonprofit organizations are contained in Office
of Management and Budget Circular A-122. Attachment A, paragraph
A.2.g., of that Circular sets forth the general principle that, for
costs to be allowable, they must be adequately documented. Another
general principle is that total costs must be net of applicable credits.
Att. A, para. A.1. and A.5. Attachment B, paragraph 50, of the Circular
provides that travel costs are allowable when they are directly
attributable to specific work under an award, or are incurred in the
normal course of administration of the organization. Travel costs may
be charged on an actual basis, or on a per diem or mileage basis.
Grantee was able to provide documentation which OHDS found satisfied the
regulatory requirements for a total of $2,600 of the questioned costs.
For the remaining $2,304 in questioned costs, Grantee effectively
submitted no documentation. OHDS reasonably rejected the hotel bill for
$166.56 as documentation for any questioned cost item. Although
Grantee's December 7, 1989 letter implies that the bill supports travel
in March 1987 for a named employee, Grantee provided no information
sufficient to identify the specific item of questioned costs which the
bill allegedly supports. OHDS provided Grantee with ample opportunity
to support its costs and should not have to provide a further
opportunity where Grantee failed to provide necessary information.
We conclude, therefore, that the remaining disallowance of $2,304 was
proper.
Conclusion
For the foregoing reasons, we uphold the remaining disallowance of
$2,304.
____________________________
Norval D. (John) Settle
___________________________
Alexander G. Teitz
____________________________
Judith A. Ballard Presiding
Board