CGA Financial Management & Reporting 3 — Questions and Answers
Question 1: A grantee discovers a $5,000 overcharge on a federal grant after the grant period ends. What is the correct action?
- Ignore the error since the grant period has closed
- Notify the awarding agency and refund the overcharged amount (Correct answer)
- Apply the excess funds to another allowable grant expense
- Offset the overcharge against future grant draws
Correct answer: Notify the awarding agency and refund the overcharged amount
Grantees must refund any overcharges to the federal awarding agency and disclose the error, even after the grant period closes.
Question 2: Under the cost principles in 2 CFR Part 200, which test must ALL costs meet to be allowable?
- Necessary, reasonable, allocable, and consistent with GAAP
- Allowable, allocable, reasonable, and consistently applied (Correct answer)
- Justified, documented, auditable, and program-relevant
- Budgeted, approved, documented, and within period of performance
Correct answer: Allowable, allocable, reasonable, and consistently applied
Per 2 CFR §200.405, all costs charged to federal awards must be allowable, allocable, reasonable, and consistently applied across all programs.
Question 3: An organization charges 50% of the executive director's salary to a federal grant. This is an example of which allocation method?
- Time and effort reporting (Correct answer)
- Proportional allocation based on benefit
- Indirect cost rate application
- Salary cap limitation
Correct answer: Time and effort reporting
Charging a percentage of salary to a federal award based on documented time spent is time and effort reporting, required under 2 CFR §200.430.
Question 4: What is the primary purpose of a Financial Status Report (FSR) submitted to a federal awarding agency?
- To request an extension of the grant period
- To document and report actual expenditures against the approved budget (Correct answer)
- To certify that the grant objectives have been achieved
- To request a budget modification
Correct answer: To document and report actual expenditures against the approved budget
An FSR (now often called an SF-425 Federal Financial Report) documents actual expenditures, unliquidated obligations, and federal cash drawn down versus the approved budget.
Question 5: Which of the following best describes 'indirect costs' in grant budgeting?
- Costs directly traceable to a specific grant activity
- Costs incurred for common or joint objectives that cannot be specifically identified with a single award (Correct answer)
- Administrative salaries that are partially charged to the grant
- Equipment purchased exclusively for grant activities
Correct answer: Costs incurred for common or joint objectives that cannot be specifically identified with a single award
Indirect costs are those incurred for common or joint objectives of an organization that cannot be readily identified with a specific project or activity.
Question 6: A grantee wants to transfer 12% of funds between two budget categories. Under most federal awards, this action requires:
- Prior written approval from the federal awarding agency (Correct answer)
- Only internal grantee board approval
- A formal grant amendment signed by both parties
- No action if within the same program objective
Correct answer: Prior written approval from the federal awarding agency
Most federal awards require prior written agency approval for budget modifications exceeding 10% of the total award or involving certain restricted categories.
Question 7: The SF-270 form is used by grantees to:
- Report final expenditures at grant closeout
- Request advance or reimbursement of federal cash (Correct answer)
- Certify compliance with grant conditions
- Report program income earned during the award period
Correct answer: Request advance or reimbursement of federal cash
The SF-270 (Request for Advance or Reimbursement) is used to request federal cash payments either as an advance or reimbursement for incurred costs.
CGA Financial Management & Reporting 3
A grantee discovers a $5,000 overcharge on a federal grant after the grant period ends.
What is the correct action?