Common use of Source Documentation Clause in Contracts

Source Documentation. The general standard is that all accounting records must be supported by source documentation (see 24 CFR 85.20(b)(6) and 84.21(b)(7)). Supporting documentation is necessary to show that the costs charged against CDBG funds were incurred during the effective period of the subrecipient’s agreement with the grantee, were actually paid out (or properly accrued), were expended on allowable items, and had been approved by the responsible official(s) in the subrecipient organization. The source documentation must explain the basis of the costs incurred as well as show the actual dates and amount of expenditures. For example: • With respect to payrolls, source documentation should include employment letters and all authorizations for rates of pay, benefits, and employee withholdings. Such documentation might include union agreements or minutes from board of directors’ meetings where salary schedules and benefit packages are established, copies of written personnel policies, W-4 forms, etc. For staff time charged to the CDBG program activity, time and attendance records should be available. If an employee’s time is split between CDBG and another funding source, there must be time distribution records supporting the allocation of charges among the sources. Canceled checks from the employees, insurance provider, etc., or evidence of direct deposits will document the actual outlay of funds. • With respect to the cost of space and utilities, space costs must be supported by documentation such as rental or lease agreements. Utility costs will be supported by bills from the utility companies. Both types of expenses will be supported by canceled checks. If the cost of space or utilities is split between the CDBG program and other sources, there must be a reasonable method in place to allocate the charges fairly among the sources, consistent with the guidelines covering allocable costs in Section 2.4. • With respect to supplies, documentation would include purchase orders or requisition forms initiated by an authorized representative of the subrecipient, an invoice from the vendor (which has been signed-off by the subrecipient to indicate the goods were received), the canceled check from the vendor demonstrating payment was made, and information regarding where the supplies are being stored and for what cost objective(s) they are being used. Some additional requirements related to source documentation include: • All source documentation does not have to be located in the CDBG project files, but it must be readily available for review by the grantee, HUD, or other authorized representatives at all times. For example, employment letters and salary schedules are not likely to be maintained in a subrecipient’s CDBG files but instead will be kept in the organization’s central personnel files. • The subrecipient must ensure that either (a) an encumbrance/obligation is recorded whenever a contract is signed or a purchase order is issued or (b) up-to-date information on the status of all obligations is otherwise readily accessible. • The subrecipient must maintain a complete, accurate, and up-to-date record of the receipt and use of CDBG-generated program income. (See Chapter 6.0.)

Source Documentation. The general standard is that all accounting records must be supported by source documentation (see 24 CFR 85.20(b)(6) and 84.21(b)(7)). Supporting documentation is necessary to show that the costs charged against CDBG funds were incurred during the effective period of the subrecipient’s agreement with the grantee, were actually paid out (or properly accrued), were expended on allowable items, and had been approved by the responsible official(s) in the subrecipient organization. The source documentation must explain the basis of the costs incurred as well as show the actual dates and amount of expenditures. For example: •  With respect to payrolls, source documentation should include employment letters and all authorizations for rates of pay, benefits, and employee withholdings. Such documentation might include union agreements or minutes from board of directors’ meetings where salary schedules and benefit packages are established, copies of written personnel policies, W-4 forms, etc. For staff time charged to the CDBG program activity, time and attendance records should be available. If an employee’s time is split between CDBG and another funding source, there must be time distribution records supporting the allocation of charges among the sources. Canceled checks from the employees, insurance provider, etc., or evidence of direct deposits will document the actual outlay of funds. •  With respect to the cost of space and utilities, space costs must be supported by documentation such as rental or lease agreements. Utility costs will be supported by bills from the utility companies. Both types of expenses will be supported by canceled checks. If the cost of space or utilities is split between the CDBG program and other sources, there must be a reasonable method in place to allocate the charges fairly among the sources, consistent with the guidelines covering allocable costs in Section 2.4. •  With respect to supplies, documentation would include purchase orders or requisition forms initiated by an authorized representative of the subrecipient, an invoice from the vendor (which has been signed-off by the subrecipient to indicate the goods were received), the canceled check from the vendor demonstrating payment was made, and information regarding where the supplies are being stored and for what cost objective(s) they are being used. Some additional requirements related to source documentation include: •  All source documentation does not have to be located in the CDBG project files, but it must be readily available for review by the grantee, HUD, or other authorized representatives at all times. For example, employment letters and salary schedules are not likely to be maintained in a subrecipient’s CDBG files but instead will be kept in the organization’s central personnel files. •  The subrecipient must ensure that either (a) an encumbrance/obligation is recorded whenever a contract is signed or a purchase order is issued or (b) up-to-date information on the status of all obligations is otherwise readily accessible. •  The subrecipient must maintain a complete, accurate, and up-to-date record of the receipt and use of CDBG-generated program income. (See Chapter 6.0.)

Source Documentation. ‌ The general standard is that all accounting records must be supported by source documentation (see 24 CFR 85.20(b)(6) and 84.21(b)(7)). Supporting documentation is necessary to show that the costs charged against CDBG funds were incurred during the effective period of the subrecipient’s agreement with the grantee, were actually paid out (or properly accrued), were expended on allowable items, and had been approved by the responsible official(s) in the subrecipient organization. The source documentation must explain the basis of the costs incurred as well as show the actual dates and amount of expenditures. For example: • With respect to payrolls, source documentation should include employment letters and all authorizations for rates of pay, benefits, and employee withholdings. Such documentation might include union agreements or minutes from board of directors’ meetings where salary schedules and benefit packages are established, copies of written personnel policies, W-4 forms, etc. For staff time charged to the CDBG program activity, time and attendance records should be available. If an employee’s time is split between CDBG and another funding source, there must be time distribution records supporting the allocation of charges among the sources. Canceled checks from the employees, insurance provider, etc., or evidence of direct deposits will document the actual outlay of funds. • With respect to the cost of space and utilities, space costs must be supported by documentation such as rental or lease agreements. Utility costs will be supported by bills from the utility companies. Both types of expenses will be supported by canceled checks. If the cost of space or utilities is split between the CDBG program and other sources, there must be a reasonable method in place to allocate the charges fairly among the sources, consistent with the guidelines covering allocable costs in Section 2.4. • With respect to supplies, documentation would include purchase orders or requisition forms initiated by an authorized representative of the subrecipient, an invoice from the vendor (which has been signed-off by the subrecipient to indicate the goods were received), the canceled check from the vendor demonstrating payment was made, and information regarding where the supplies are being stored and for what cost objective(s) they are being used. Some additional requirements related to source documentation include: • All source documentation does not have to be located in the CDBG project files, but it must be readily available for review by the grantee, HUD, or other authorized representatives at all times. For example, employment letters and salary schedules are not likely to be maintained in a subrecipient’s CDBG files but instead will be kept in the organization’s central personnel files. • The subrecipient must ensure that either (a) an encumbrance/obligation is recorded whenever a contract is signed or a purchase order is issued or (b) up-to-date information on the status of all obligations is otherwise readily accessible. • The subrecipient must maintain a complete, accurate, and up-to-date record of the receipt and use of CDBG-generated program income. (See Chapter 6.0.)