Organizations receiving awards are required to have an adequate accounting system. Adequate accounting systems provide assurances to the Federal Government that organizations can account for expenditure of federal funds in accordance with applicable regulations, and terms and conditions of an award. Adequate accounting systems provide for:
identification of costs (budgeted costs and actual
expenses) by project/grant;
identification of costs as direct, indirect, and
unallowable;
complete and accurate financial reports (including
balance sheets and income statements); and
maintenance of adequate source documentation (purchase
orders, invoices, canceled checks, etc.).
When an NSF Program is considering making an award to an organization, CAAR will be requested to determine whether the organization has an adequate accounting system. If an organization has been audited by another Federal Agency, CAAR will request that the organization provide a copy of the resulting report. If an organization's accounting system has not been determined to be adequate previously, CAAR will request that the organization complete an Information Concerning Financial Management Systems form. Possible accounting system deficiencies, and suggestions for correcting such deficiencies, are discussed with the submitting organization.
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