Comptroller Fiscal Year Memo Letter Head


To:Legislative Leadership, Judicial Branch Administrators, Elected Officials, Secretariats, Department Heads, Chief Fiscal Officers, General Counsels and Payroll Directors
From:Martin J. Benison, Comptroller
Date:April 23, 2009
Re:American Recovery and Reinvestment Act: Accounting and Reporting - Update #2

Comptroller Memo
# FY2009-30


Executive Summary

This is the second update of The American Recovery and Reinvestment Act of 2009 ("ARRA" or "Federal Stimulus Funds") Accounting and Reporting Policy doc format of po_fed_grant_ARRA_policy.doc
that was released on March 6, 2009 (See Federal Grants and Cost Accounting). It includes definitive guidance for coding all financial activity in MMARS to support reporting requirements for accountability and transparency. This document also re-enforces the requirement that all ARRA-related activity must be segregated and easily identifiable as being ARRA funded.

Initial guidance available from the federal government is very specific to the need to segregate this funding and resulting spending activity from any and all similar programmatic activity. Therefore, no ARRA funding or expenditure activity should be co-mingled with other federal activity, even if they pertain to the same program. Supplemental awards made under the ARRA MUST BE clearly identified and segregated from the activity which occurs as a result of any prior awards. This will be done by creating separate accounts and revenue source codes, and will also require a separate set of major program and program codes. The use of a Location Code is also now required for each expenditure accounting line.

Categorical Grants (Fund 0100)

When a department receives an award letter for a program that is to be funded by economic stimulus monies, the department should then perform the following:

Complete the Federal Grant Set-Up Form, as defined in Policies and Procedures for Establishing a Federal Grant in MMARS, last revised on 11-01-2006. Attachment A details the required steps.

As stated in the March 6, 2009 policy document, all ARRA categorical grants must be assigned a separate appropriation account number, unique by CFDA#. All categorical grants must utilize the grant cost accounting budget structure, BQ88 and establish, with CTR, Major Program and Program Codes.

Each new grant will be assigned a unique revenue source code, which will begin with the letter A.

Federal Entitlement Funds

ALL ARRA-funded reimbursements must follow the same guidance for set-up of a categorical grant, with the exception of an appropriation number. State recipients must complete the grant set-up form, remit a copy of the award letter and complete a BGRG document. CTR will establish the cost accounting and Program Tables as well as the revenue budget to receive the ARRA federal funds.

Capital or Infrastructure Awards

For Federal Stimulus Awards that are designated to be Capital or Infrastructure awards the Major Program Category will be coded with one of the current capital reporting codes. Capital or Infrastructure awards are broadly defined as any investment in an asset with a useful life of five or more years.

Departments will follow the same model for categorical grant set-up as well as any existing set-up required for capital spending.

Coding Activity

As previously stated in The American Recovery and Reinvestment Act: Accounting and Reporting policy document, issued on March 6, 2009, MMARS is the primary reporting vehicle for financial information.

Also stated in the March 6 th policy document, departments must record a Program Code on each encumbrance posted to an ARRA funded appropriation.

All revenue received for a categorical grant or an entitlement funded under ARRA must be coded with the Program Code assigned for that program; this is necessary so that MMARS will accurately report ARRA revenues.

Effectively immediately, all expenditures made from ARRA - coded accounts (appropriations) must identify the Primary Performance Location. This is a new requirement for ARRA.

Primary Performance Location is defined as: the Location in which moneys are spent, services are performed or where a capital investment is made.

For the purposes of the required reporting, Location will be defined as a city, town, county or regional school district. Location codes have been established for each municipality and each county within the Commonwealth as well as the Regional School Districts. These codes are normally specific to a department; therefore, CTR will upload the Location Codes for each department. A listing of those codes is available at: xls format of master_loc_list2.xls
for your future reference. CTR has also established state-wide roll-up codes for each city/town as well as roll-ups for counties. Departments need only to code the Location Code on each accounting line.

Primary Performance Location is NOT necessarily the location of the payee; it is intended, under ARRA to be used as defined above.

CTR recognizes there may be scenarios where the right Location Code may not be clear. Department managers should use their best judgment when assigning a Location Code to a payment accounting line.

The following scenarios are intended to provide guidance to departments:

Example A: A road re-surfacing project will span multiple towns. 50% of the mileage to be re-paved exists in a single town, while 25% each is attributable to two other towns. Since this is clearly measurable, the expenditures should be coded to the three separate Locations, proportionately to the project.

Example B: Funds are expended to a consortium for the purposes of managing a regional program to provide services to citizens. While eligible citizens will travel from multiple locations to receive the services, the central point for providing services is within a single city. The expenditures for this activity should be coded with the Location Code for that city.

Example C: Funds will be expended for a project where 80% of the activity will occur in a single town, activity may occur within a number of other towns at a diminishing level. All of the expenditures for this project may be accounted for with a Location Code representing the 80% town. Alternatively the model in example A may be used.

When the Primary Performance Location is a county, departments should use the code assigned for that county.

While it remains an option available at the department's discretion, Location Code is not required for encumbrances.

For Departments currently using Established Location Codes

A small number of departments currently enter Location Codes on some of their documents. To the extent possible, we have left those codes intact and assigned global roll-ups to define a municipality as well as a county. Departments do not need to change their current usage of Location Code, MMARS roll-ups are inferred and no additional data entry will be required.

Identifying Payments to Sub-Recipients

Payments to sub-recipients fall under the 801 CMR 21.00 or 815 CMR 2.00 rules as applicable. MM, RR, PP object classes all have sub-recipient implications - specifically M03, MM3, P01, PP1, R03, R09, R11, R14 and R15 are all used in the annually audited Schedule of Expenditures of Federal Awards to report sub-recipients. Sub-recipient requirements will also be passed down through any ISA to another state department. Departments will need to ensure that they verify the federal grant requirements under the federal grant they are receiving and any additional ARRA requirements that come down from other oversight entities. There will be additional reporting requirements related to ARRA that may be passed down to any entity to which you provide ARRA funding. CTR will continue to provide information as we receive clarification from the various federal oversight entities.

Catching Up

CTR recognizes that the activity for ARRA is occurring at a rapid speed. To the extent that a department has received funds prior to having established the appropriate cost accounting options or to the extent that expenditures may have been posted without the proper coding attributes, departments should work with the CTR General Accounting Bureau to determine the best action to correct the coding.

Departments should recognize that MMARS is the Commonwealth system of record for financial information. MMARS will provide information to be used in reporting at a state-wide level to the federal government. MMARS information will also be the basis for the transparency reporting requirements at both the state and federal levels.

In Summary

The receipt and expenditure of ARRA funds has resulted in an extraordinary level of reporting and transparency. To address the reporting needs, CTR has strategized the usage of existing MMARS coding options to minimize the changes departments will encounter. The activity for categorical grants changes only by virtue of the requirement to enter a Program Code on encumbrances as well as the requirement to enter a Location Code on each accounting line of an expenditure document.

Changes for entitlement funds include the requirement to now establish a cost accounting budget for each ARRA-related entitlement increase and to enter a Program Code on each revenue accounting line. Location Codes are not required on cash/revenue documents. Capital or Infrastructure Awards will follow the same set-up and coding requirements for all ARRA awards.

Information Sources

Related policies

Contacts - CTR Help Desk 617-973-2468

Comptroller Web Portal Page

Attachment A: Required Set-up Steps doc format of chartdoc.doc
xls format of                             master_loc_list2.xls



cc:MMARS Liaisons
 Legal Counsels
 Federal Stimulus Logistics
 Internal Distribution