NOTE: The following definitions clarify the meaning and usages of various terms used in the Financial Manual for Grants and Contracts and are applicable and binding for that purpose. Unless a specific legal authority is cited, they are not intended to be definitions for legal or general use.
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
A
Acquisition Cost
The cost of the asset including the cost to put it in place. Acquisition cost for equipment means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it was acquired. Ancillary charges, such as taxes, duty, protective in transit insurance, freight, and installation may be included in, or excluded from, capital expenditure cost in accordance with the organization’s regular accounting practices.
Acquisition Date
The date that final acquisition is complete and title vests in the Contractor; or the date federal or state property transfers title to the Contractor. When used in terms of maintaining the master property list, it may also be used to refer to the date the Contractor receives loaned property from the federal or state government.
Agency
Refers to the staff and departments of the Texas Workforce Commission.
Allocable
Cost is allocable to a particular cost objective if the goods or services involved are chargeable or assignable to such cost objective in accordance with the relative benefits received; this applies whether the cost is direct or indirect; in order to be allocable to a particular cost objective, the cost must be treated consistently with other costs incurred for the same purposes in like circumstances.
Applicable Credits
Those receipts or reduction of expenditure-type transactions that offset or reduce expense items allocable to the award as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the organization relate to allowable costs, they shall be credited to the federal or state award either as a cost reduction or cash refund, as appropriate.
In some instances, the amounts received from the state or federal government to finance activities or service operations of the organization should be treated as applicable credits. Specifically, the concept of netting such credit items (including any amounts used to meet cost sharing or matching requirements) should be recognized in determining the rates or amounts to be charged to federal or state awards. Additional examples can be found in ASMB C-10
, Question 2-17.
B
Base Period
The period in which indirect costs are incurred and accumulated for allocation to work performed in that period. The base period normally should coincide with the organization’s fiscal year but, in any event, shall be so select as to avoid inequities in the allocation of the costs.
Board
Refers to a Local Workforce Development Board created under Texas Government Code, Chapter 2308.
C
Capacity of the Parties
The parties to a contract must have contractual capacity. Certain persons such as adjudicated incompetents have no legal capacity to a contract, while others, such as minors, incompetent persons, and intoxicated persons, have limited capacity to a contract. All others have full contraction capacity.
Capital Expenditure
Cost of the asset, including the cost to put it in place. Capital expenditure means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it was acquired.
(Ancillary charges, such as taxes, duty, protective in transit insurance, freight, and installation may be include in, or excluded from, capital expenditure cost in accordance with the governmental unit’s regular accounting practices.)
Capital Lease
Capital leases are generally allowable only up to the amount that would be allowed had the governmental unit purchased the property on the date the lease agreement was executed, including depreciation or use allowance [see Note], maintenance, and insurance. A capital lease is defined by the Financial Accounting Standards Board Statement 13 as a lease that meets one or more of the following criteria four criteria:
- The lease transfers ownership of the property to the lessee by the end of the lease term.
- The lease contains a bargain purchase option.
- The lease term is equal to 75% or more of the estimated economic life of the leased property. However, if the beginning of the lease term falls within the last 25% of the total estimated economic life of the leased property, including earlier years of use, this criterion shall not be used for purposes of classifying the lease
- The present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90% of the excess of the fair value of the leased property to the lessor at the inception of the lease over any related investment tax credit retained by the lessor and expected to be realized. However, if the beginning of the lease term falls within the last 25 percent of the total estimated economic life of the leased property, including earlier years of use, this criterion shall not be used for the purpose of classifying the lease. A lessor shall compute the present value of the minimum lease payments using the interest rate implicit in the lease. A lessee shall compute the present value of the minimum lease payments using his incremental borrowing rate unless (i) it is practicable for him to learn the implicit rate computed by the lessor and (ii) the implicit rate computed by the lessor is less than the lessee’s incremental borrowing rate. If both of those conditions are met, the lessee shall use the implicit rate.
Note: The OMB "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards" removed "use allowances" as an option for the use of an organization's buildings, other capital improvements, and equipment on hand, effective December 26, 2014. That change supersedes the reference to "use allowances" in the Definition of "capital lease," which will be updated later to reflect the change.
Consideration
Each party to a contract must intentionally exchange a legal benefit or incur a legal detriment as an inducement to the other party to make a return or exchange.
Contractor
The recipient of an award or agreement from the Texas Workforce Commission for the purpose of providing services under funds administered by the Texas Workforce Commission. It includes local workforce development boards. Unless specifically stated, the requirements that are applicable to a Contractor will also apply to that Contractor’s subcontractors.
Cost Contract
A cost reimbursement contract in which there is no fee.
Cost Groupings
Refers to the intermediate cost pools that are allocated to the organization’s major functions under the multiple rate method of developing and applying indirect cost rates.
Cost-Plus-Award-Fee Contract
A cost reimbursement contract that provide an incentive for excellence in contract performance.
Cost-Plus-Fixed-Fee Contract
A type of cost reimbursement contract that assigns minimal responsibility for costs and for which a fixed fee is negotiated. The fee provides an incentive for a subcontractor to contract for efforts that might otherwise pose too great a risk to it to assume.
Cost-Plus-Incentive-Fee Contract
A cost reimbursement contract that provides an incentive for the subcontractor to achieve lower costs.
Cost Plus Percentage of Construction Contract
A contract in which the amount of profit paid is calculated as a percentage of construction cost, so that profit increases commensurate with increases in cost.
Cost Plus Percentage of Cost Contract
A contract in which the amount of profit paid is calculated as a percentage of cost, so that profit increases commensurate with increases in cost.
Cost Pool
Intermediate cost objectives or temporary accounts used to temporarily aggregate costs that cannot be readily assigned to final cost objectives.
Cost Reimbursement Contract
Agreements that provide reimbursement to the subcontractor for performing at a certain level of effort, regardless of the level of output achieved.
Cost Sharing Contract
A cost reimbursement contract in which the subcontractor absorbs a portion of the costs in the expectation of substantial compensating benefits.
D
Direct Costs
Costs that can be identified specifically with a particular final cost objective.
Discovered Property
Property that is discovered during a physical inventory or at any other time, that the Contractor was not aware that it possessed. The property was neither included in the property or accounting records.
Distribution (Allocation) Base
The accumulated direct costs (normally either total direct salaries and wages or total direct costs exclusive of any extraordinary or distorting expenditures) used to distribute indirect costs to individual awards. The direct cost base selected should result in each award bearing a fair share of the indirect costs in reasonable relation to the benefits received from the costs.
E
Educational Institution
An entity that is subject to Office of Management and Budget (OMB) Circular A-21.
Equipment
An article of non-expendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals the lesser of (a) the capitalization level established by the organization for financial statement purposes, or (b) $5,000.
(For Supplemental Nutrition Assistance Program Employment and Training funds, equipment means an article of tangible personal property that has a useful life of more than two years and an acquisition cost of $500 or more, if it was purchased prior to May 17, 1995 for OMB Circular A-87, or May 19, 1998, for OMB Circular A-122. If purchased after these dates, it shall have the definition above.)
Equity Share
Refers to the federal agency’s, state’s, or subcontrator’s share of participation in the value of property that is sold, transferred, or retained by an entity. It is calculated as the participation in the acquisition cost of the property multiplied by either the sales proceeds (if sold) or the current fair market value (if transferred or retained).
Excellent Condition
Pertaining to the condition of equipment, refers to equipment that is in new or excellent condition.
Exempt Property
Property that is acquired by a Contractor when the federal government vests title that was previously held by the federal government in the Contractor without any further obligation to the federal government.
F
F&A Costs
See “Facilities and Administration”
“Facilities” and “Administration”
Two broad categories of indirect costs used by educational institutions and non-profit organizations. “Facilities” is defined as depreciation and use allowances (ee Note), interest on debt associated with certain buildings, equipment and capital improvements, and operation and maintenance expenses. (Educational institutions also include library expenses.) “Administration is defined as general and administration and general expenses and all other types of expenditures not included in the definition of “Facilities.” (Educational institutions also include departmental administration, sponsored projects administration and student administration and services.) Also referred to as F&A costs.
Note: The OMB "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards" removed "use allowances" as an option for the use of an organization's buildings, other capital improvements, and equipment on hand, effective December 26 2014. That change supersedes the reference to "use allowances" in this Definition of "'Facilities' and 'Administration,'" which will be updated later to reflect the change.
Fair Condition
Pertaining to the condition of equipment, it refers to equipment that is soiled or shopworn, rusted, deteriorated or damages, but that is still usable though the utility is slightly impaired; renovation or repair is expected in the near future; it may be used to describe new, used or reconditioned property.
Final Rate
An indirect rate applicable to a specified past period which is based on the actual allowable costs of the period. A final audited rate is not subject to adjustment. See also Provisional Rate.
Firm Fixed Price Contract
A type of fixed price contract that gives a subcontractor full responsibility for performance costs and resulting profit/loss
Fixed Price Contract
Method of contracting in which a specified price is paid for specified deliverables regardless of the Contractors actual costs incurred.
Fixed Rate
A fixed rate may be negotiated when a predetermined rate is not appropriate. A fixed rate has the same characteristics as a predetermined rate, except that it may be adjusted for over or under recovery of indirect costs. The adjustment is based on a comparison of the organization’s actual and estimated costs at the organization’s fiscal year-end, with the difference being carried forward to a future period (usually the organization’s next fiscal year). A fixed rate may not be retroactively adjusted. Additional provisions for fixed rates as they relate to educational institutions may be found at OMB Circular A-21 (G)(4).
Flow-Through Funds (or Pass-Through Funds)
Funds that are distributed to a primary recipient and subsequently passed through to another organization that actually performs the program for which the funds are provided. There is no measurable involvement by the primary recipient in the expenditure of the funds. The primary recipient’s involvement is generally limited to monitoring and oversight. Flow-through funds should be considered in the development of an indirect cost rate(s), but are generally applicable to states and not local governments.
FMGC Supplement on Procurement
Appendix D to the FMGC--FMGC Supplement on Procurement.
G
General Purpose Equipment
Equipment, which is not limited to research, medical, scientific or other technical activities, e.g. office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles.
Good Condition
Pertaining to the condition of equipment, it refers to equipment that is slightly worn, but that is still usable and for which the utility is not impaired; it may be used to describe new, used or reconditioned property.
Governmental Entity
State, local and Indian tribal governments, and other entities subject to the Uniform Grant Management Standards (UGMS) .
Grantee (or Recipient)
An organization receiving financial assistance directly from federal or state awarding agencies to carry out a project or program.
I
Idle Capacity
Unused capacity of partially used facilities. (Facilities means land and buildings or any portion thereof, equipment individually or collectively, or any other tangible capital asset, wherever located, and whether owned or leased by the organization.) Idle capacity is the difference between (a) that which a facility could achieve under 100 percent operating time on a one-shift basis less operating interruptions resulting from time lost for repairs, setups, unsatisfactory materials, and other normal delays, and (b) the extent to which the facility was actually used to meet demands during the accounting period. A multi-shift basis should be used if it can be shown that this amount of usage would normally be expected for the type of facility involved. See also, Idle Facilities.
Idle Facilities
The completely unused facilities that are excess to the organization’s current needs. (Facilities means land and buildings or any portion thereof, equipment individually or collectively, or any other tangible capital asset, wherever located, and whether owned or leased by the organization.) See also Idle Capacity.
Incentive Contracts
A fixed price or cost reimbursement contract that makes the subcontractor responsible for performance costs, but for which a negotiated profit or fee is tailored to the specific uncertainties associated with performance of the contract.
Indirect Costs
Costs (a) incurred for a common or joint purpose benefiting more than one cost objective, and (b) not readily assignable to the cost objectives specifically benefited, without effort disproportionate to the results achieved.
Intangible Property
Personal property having no physical existence such as copyrights, patents, or trademarks.
L
Legality of Object
The purpose of a contract must not be criminal, or otherwise against public policy.
Level of Effort
Under the terms of the contract, the subcontractor is to provide a specified level of effort or activity (for example, hours). Payment is based on the effort expended rather than on the results achieved.
Level of Output
Refers to the results achieved as a result of a specified level of effort or activity.
M
Major Functions
The determination of what constitutes an organization’s major functions will depend on its purpose in being; the types of services it renders to the public, its clients, and its members; and the amount of effort it devotes to such activities as fundraising, public information and membership activities. Educational Institutions — see also OMB Circular A-21 (B)(1).
Manifestation of Mutual Assent
The parties to a contract must manifest by words or conduct that they have agreed to enter into a contract. The usual method of showing mutual assent is by offer and acceptance.
Modified Total Direct Costs
A distribution base that consists of all salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontractors (up to the first $25,000 of each subgrant or subcontract). Equipment, capital expenditures, charges for patient care, rental costs and the portion in excess of $25,000 must be excluded from modified total direct costs. Participant support costs are also generally excluded from modified total direct costs. Other items may only be excluded when the federal cognizant agency determines that an exclusion is necessary to avoid a serious inequity in the distribution of indirect costs.
N
Net Sale Proceeds
Proceeds remaining from the sale of property after reasonable selling and administrative expenses have been deducted.
Nongovernmental Entity
Refers to Contractors that are institutions of higher education, hospitals, other non-profits, or commercial organizations.
Non-Profit Organization
An entity subject to OMB Circular A-122.
O
Operating Lease
Any lease that is not defined by the Financial Accounting Standards Board Statement 13 as a capital lease.
Other Capital Assets
Buildings, land and improvements to buildings or land that materially increase their value or useful life.
P
Pass-through Entity
A non-federal entity that provides a federal award to a subrecipient to carry out a federal program; or a non-state entity that provides a state award to a subrecipient to carry out a state program.
Personal Property
Property of any kind except real property. It may be tangible, having physical existence, or intangible, having no physical existence such as copyrights, patents, or securities.
Poor Condition
Pertaining to the condition of equipment, it refers to equipment that is badly broken, soiled, mildewed, deteriorated or damaged and for which utility is seriously impaired.
Pre-award Costs
Costs incurred prior to the effective date of the award directly pursuant to the negotiation and in anticipation of the award where such costs are necessary to comply with the proposed delivery schedule or period of performance.
Predetermined Rate
A permanent rate that is based on estimated future costs, and established in advance for a specified current or future period. Once established, it may not be adjusted. Predetermined rates are appropriate where there is reasonable assurance, based on past experience and a reliable projection of costs, that the rate is not likely to exceed a rate that would result if actual costs were determined.
Program Income
Gross income received by the grantee or subgrantee directly generated by a grant supported activity, or earned only as a result of the grant agreement during the grant period.
Provisional Rate
Provisional and final rates are two stages of one approach that is used when neither predetermined nor fixed rates are appropriate. A provisional rate is a temporary rate established for a future prospective period of time that is used until actual costs can be determined and a final rate is established. If the provisional rate is lower than the final rate, the underpayment is subject to the availability of funds. If the provisional rate was higher than the final rate, the overpayment must be credited or returned to the funding source.
R
Real Property
Land, including land improvements, structures and appurtenances thereto, excluding movable machinery and equipment.
Reasonable Cost
A cost, that in its nature and amount, does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. In determining reasonableness of a given cost, consideration shall be given to:
- Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the organization or the performance of the award
- The restraints or requirements imposed by such factors as: sound business practices; arms-length bargaining; laws and regulations; and terms and conditions of the award
- Market prices for comparable goods or services
- Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the organization, its employees, the public at large, and the federal or state government
- Significant deviations from the established practices of the organization which may unjustifiably increase the award’s cost
Replacement Property
Property acquired using the proceeds from the sale of existing property or by using existing property as a trade-in towards new property.
Research Data
Data that is related to a published research finding that was produced under a federally sponsored award to a nongovernmental entity, that is used by the federal government in the development of an agency action that has the force and effect of law as it relates to property. It generally includes, “the recorded factual material commonly accepted in the scientific community as necessary to validate research findings. It excludes:
- Physical objects, such as laboratory samples
- Preliminary analyses and drafts of scientific papers
- Plans for future research
- Peer reviews and communications with colleagues
- Trade secrets and commercial information
- Materials necessary to be held confidential by a research until they are published
- Personnel, medical, and other information constituting an invasion of privacy
- Other similar information which is protected by law.
A research finding is considered to be published when, “published in a peer-reviewed scientific or technical journal; or a federal agency publicly and officially cites the research findings in support of an agency action that has the force and effect of law.” The agency is considered to have used data when it performs the latter of the two.
Resource Sharing
The process used to pay for the costs or the funding of shared costs of the One-Stop. Resources used to pay or fund the costs may be in the form of cash transfers, provision of goods and services that benefit multiple partners, or, when permitted by the program’s authorizing legislation, through the provision of third-party in-kind contributions. The use of full-time equivalents in lieu of salary and benefit costs for shared staff functions may also be used as resources.
S
Shared Costs
As used in Section 11.6 of this manual, costs of Workforce Solutions Offices that benefit multiple Workforce Solutions Office Partners and are incurred in support of the services delivered through one or more Workforce Solutions Offices. Many of these costs, such as facilities, will be easier to identify, while others, such as the costs of system development, may be more difficult to both identify and define.
The terms, “Workforce Solutions Office” and “Workforce Solutions Office Partner,” have the meanings in 40 TAC §§801.23 and 801.27, respectively.
Single Audit
An audit which includes both the entity’s financial statements and the federal and/or state awards as described in OMB Circular A-133, Subpart E, §__.500 and UGMS, Part IV, Subpart E, §__.500.
Special Purpose Equipment
Equipment which is used only for research, medical, scientific, or other technical activities, e.g. microscopes, x-ray machines, surgical instruments, and spectrometers.
State Single Audit Coordinating Agency
The state agency that is designated by the governor as being the state agency with single audit oversight responsibility for the assigned entities.
Subcontractor
Refers to the recipient of an award from a Contractor.
Subgrantee (or Subrecipient)
A non-federal, non-state entity that expends federal and/or state awards received from a pass-through entity to carry out a federal and/or state program, but does not include an individual that is a beneficiary of such a program. A subrecipient may also be a recipient of other federal and/or state awards directly from a federal awarding agency.
Supplies
All personal property excluding equipment, intangible property and debt instruments, and inventions of a Contractor that were first conceived or reduced to practice under a federal or state award.
U
Use Allowances
A means of allocating the cost of fixed assets to periods benefiting from asset use that is calculated as a percentage of acquisition cost as set forth in applicable cost principles. See OMB Circular A-21, (J)(14); OMB Circular A-87 Attachment B, (11); OMB Circular A-122, Attachment B, (11); and/or UGMS, Part II, Attachment B (16).
W
Workforce Service Provider
An entity or individual under contract with a local workforce development board to operate: 1) one or more Workforce Solutions Offices, or 2) one or more programs (e.g. child care) or components of one or more programs (e.g., issuing checks for youth participating in summer employment or performing child care billing).
Chapters
- Introduction
- 1 - Agency & Board Responsibilities
- 2 - Internal Controls
- 3 - Insurance
- 4 - Cost Sharing & Matching
- 5 - Program Income
- 6 - Budget
- 7 - Cash Management
- 8 - Cost Principles
- 9 - Travel
- 10 - Personnel
- 11 - Cost Allocation & Resource Sharing
- 12 - Indirect Cost Rates
- 13 - Property
- 14 - Procurement
- 15 - Contracts
- 16 - Allocation, Deobligation & Reallocation
- 17 - Financial Reporting
- 18 - Contract Closeout
- 19 - Monitoring
- 20 - Single Audit
- 21 - Enforcement, Appeals & Termination
