Fall Forum 2022 | Force Accounts - What Are Those Auditors Looking For?-Fall Forum 2022: Force Accounts

Video Transcription

Video Summary

The session on forced accounts, led by auditors Mara Ash and Cindy Watson, focused on guiding grantees through documenting and auditing their internal resources—labor, equipment, and materials—used in infrastructure projects funded by grants. Forced accounts represent the grantee's own resources applied to projects, requiring approval and precise documentation to meet federal grant compliance, particularly for long-term infrastructure undertakings influenced by regulations like Buy America Build America and Stafford Act exceptions for disaster-prone areas.<br /><br />The presenters emphasized understanding specific grant requirements since forced accounts vary by program. For labor, documentation must include payroll policies, schedules, complete payroll detail, time records—even for exempt employees—and activity logs specifying hours worked, tasks performed, and locations. Proof of payment involves bank statements confirming payroll disbursement, not just pay stubs. Fringe or wrap rates covering payroll taxes and benefits like sick and vacation time must be consistently applied and separately audited. Equipment forced accounts rely on detailed usage logs linked to specific assets, with proof of ownership or insurance, and often can utilize FEMA's established equipment rate schedules. Materials in inventory need federally compliant procurement records, detailed usage logs, and clear separation between federal and non-federal projects to ensure compliance with new requirements.<br /><br />A key recommendation was maintaining comprehensive, monthly activity reports combining labor, equipment, and materials data, which simplifies audits and supports efficient cost reporting. The auditors advised providing only requested documentation to avoid complications during audits. The session clarified forced accounts as distinct from direct or indirect costs since these represent internal, not outsourced, project execution—requiring careful calculation and validation of billable rates to federal grantors.

Keywords

forced accounts

grantee resources

grant compliance

infrastructure projects

Buy America Build America

Stafford Act exceptions

payroll documentation

equipment usage logs

federal procurement records

audit preparation