CGFO Grant Management & Federal Compliance 2 — Questions and Answers
Question 1: What is the primary distinction between a federal grant and a cooperative agreement?
- Grants are for capital projects while cooperative agreements are exclusively for operational programs
- Cooperative agreements involve substantial federal agency involvement in carrying out the program activity (Correct answer)
- Grants require a single audit while cooperative agreements are exempt from audit requirements
- Cooperative agreements have higher minimum funding thresholds than grants
Correct answer: Cooperative agreements involve substantial federal agency involvement in carrying out the program activity
The key distinction is that cooperative agreements involve substantial federal agency involvement in carrying out the program, whereas grants allow the recipient to operate with greater independence.
Question 2: In federal grant management, what is 'carryover' of unobligated balances?
- The process of transferring funds between approved budget line items within the same period
- The continuation of unspent federal grant funds from one budget period into the next period (Correct answer)
- The return of unused grant funds to the federal awarding agency at closeout
- The reallocation of indirect cost pool balances to direct cost programs
Correct answer: The continuation of unspent federal grant funds from one budget period into the next period
Carryover refers to unobligated balances of federal funds that are authorized to carry forward from one budget period to the next to continue program activities.
Question 3: Under 2 CFR Part 200, how must program income earned during the period of performance generally be treated using the default method?
- Returned immediately to the federal awarding agency upon receipt
- Used to reduce the total federal award amount on a dollar-for-dollar basis
- Added to funds committed to the project and used for additional allowable program costs (Correct answer)
- Deposited into a separate interest-bearing escrow account
Correct answer: Added to funds committed to the project and used for additional allowable program costs
Under the additive method — the default under Uniform Guidance — program income is added to the award and used for additional allowable program costs unless the federal award specifies a different method.
Question 4: Which of the following is NOT a typical activity performed during the federal grant closeout process?
- Submitting final financial and performance reports to the awarding agency
- Returning any remaining unobligated balances to the federal agency
- Requesting an extension of the period of performance for additional time (Correct answer)
- Completing final subrecipient monitoring and resolving open findings
Correct answer: Requesting an extension of the period of performance for additional time
Requesting a period of performance extension must occur before closeout begins; closeout activities finalize the award by submitting reports, returning funds, and completing monitoring.
Question 5: What is the de minimis indirect cost rate available under 2 CFR Part 200 to organizations that have never had a federally negotiated indirect cost rate?
- 5% of modified total direct costs (MTDC)
- 10% of modified total direct costs (MTDC) (Correct answer)
- 15% of total direct costs
- 8% of total program expenditures
Correct answer: 10% of modified total direct costs (MTDC)
Organizations that have never had a negotiated indirect cost rate agreement may elect to use a de minimis rate of 10% of modified total direct costs (MTDC) indefinitely.
Question 6: In a single audit, what are 'questioned costs'?
- Costs that exceed the amounts approved in the original grant budget
- Costs that an auditor has questioned due to potential noncompliance or insufficient documentation (Correct answer)
- Costs submitted for reimbursement that have not yet received agency approval
- Costs incurred after the expiration of the period of performance
Correct answer: Costs that an auditor has questioned due to potential noncompliance or insufficient documentation
Questioned costs are those that an auditor has identified as potentially violating a law, regulation, contract, or agreement, or that lack adequate documentation to support their allowability.
Question 7: Under 2 CFR Part 200, what is a 'material weakness' in the context of internal control over federal program compliance?
- A deficiency in internal control that is less severe than a significant deficiency
- A deficiency where there is a reasonable possibility that material noncompliance will not be prevented or detected on a timely basis (Correct answer)
- Any audit finding that results in questioned costs above the materiality threshold
- A violation that automatically results in suspension or debarment from federal funding
Correct answer: A deficiency where there is a reasonable possibility that material noncompliance will not be prevented or detected on a timely basis
A material weakness is a deficiency or combination of deficiencies in internal control such that there is a reasonable possibility that material noncompliance will not be prevented, detected, and corrected on a timely basis.
CGFO Grant Management & Federal Compliance 2
What is the primary distinction between a federal grant and a cooperative agreement?