Common use of Budget controls Clause in Contracts

Budget controls. Subrecipients must have procedures in place to monitor obligations and expenditures against their approved budget(s) for CDBG-funded activities. Depending on the language of the Subrecipient Agreement, the grantee may be under no obligation to reimburse a subrecipient for expenditures that exceed approved budget line items or the overall budget for CDBG-assisted activities. Therefore, the subrecipient needs to have an ongoing system to compare actual receipts, encumbrances, and expenditures with the CDBG budget to ascertain in a timely fashion whether it will be necessary to initiate a formal budget revision. In addition, since the budget reflects the subrecipient’s best estimate of the resources necessary to accomplish the CDBG project scope of services, any pattern of line item overruns should prompt a careful re-assessment of whether the available resources will still be sufficient to achieve the agreed- upon objectives. To compare and control expenditures to approved budgets, a subrecipient must: • Maintain in its accounting records the amounts budgeted for eligible activities. • Include unexpended/unobligated balances for budgeted categories, as well as obligations and expenditures. • Periodically compare actual obligations and expenditures to date against planned obligations and expenditures, and against projected accomplishments for such outlays. Obviously, these comparisons should be made on an ongoing basis, and not after a majority of funds have been committed. In addition, it is critical that subrecipients maintain a close watch over the progress achieved for the amount of funds expended. It does little good to stay within the budget line if the actual accomplishments lag far behind in terms of the units of service delivered.

Budget controls. Subrecipients must have procedures in place to monitor obligations and expenditures against their approved budget(s) for CDBG-funded activities. Depending on the language of the Subrecipient Agreement, the grantee may be under no obligation to reimburse a subrecipient for expenditures that exceed approved budget line items or the overall budget for CDBG-assisted activities. Therefore, the subrecipient needs to have an ongoing system to compare actual receipts, encumbrances, and expenditures with the CDBG budget to ascertain in a timely fashion whether it will be necessary to initiate a formal budget revision. In addition, since the budget reflects the subrecipient’s best estimate of the resources necessary to accomplish the CDBG project scope of services, any pattern of line item overruns should prompt a careful re-assessment of whether the available resources will still be sufficient to achieve the agreed- upon objectives. To compare and control expenditures to approved budgets, a subrecipient must: •  Maintain in its accounting records the amounts budgeted for eligible activities. •  Include unexpended/unobligated balances for budgeted categories, as well as obligations and expenditures. •  Periodically compare actual obligations and expenditures to date against planned obligations and expenditures, and against projected accomplishments for such outlays. Obviously, these comparisons should be made on an ongoing basis, and not after a majority of funds have been committed. In addition, it is critical that subrecipients maintain a close watch over the progress achieved for the amount of funds expended. It does little good to stay within the budget line if the actual accomplishments lag far behind in terms of the units of service delivered.