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B-196794 1 (1983-09-30)

handle is hein.gao/gaobadliy0001 and id is 1 raw text is: DECISION FILE: B-196794 THE COMPTROLLER GENERAL 'OF THE UNITEO STATES 7101 WASHINGTON. 0.C. 20548 DATE: September 30, 1983 MATTER OF: Department of Labor--Interest on Recovered Grant Funds DIGEST: 1. Where subgrantee of CETA grant to State of Arkansas earned interest on recovered FICA taxes before the recovery was returned to the Federal Government, the interest is an applicable credit under the grant agreement and grant cost principles. As a result, all interest earned by subgrantee on the recovery is owed to the grantee and by the grantee to the Department of Labor to the extent not offset by allowable grant costs. 2. Where a subgrantee of State CETA grantee re- covers grant funds and earns interest on re- coveries, the interest is not held on advance basis and is not exempt from accountability under the Intergovernmental Cooperation Act of 1968, 31 U.S.C. § 6503(a). This decision is in response to a request from the Assistant Secretary for Administration and Management, Department of Labor (DOL) for our opinion concerning the treatment of interest earned by a subgrantee on grant funds held under the Comprehensive Em- ployment and Training Act (CETA), 29 U.S.C. § 801 et seq. The DOL requests that we concur with its position that a subgrantee of a CETA grant to a State cannot retain interest earned on grant funds after they were disbursed and subsequently recovered by the subgrantee. For the reasons given below, we concur with the Department's position. During the period covering fiscal year 1974 through 1977, DOL made CETA grants to the State of Arkansas (grantee) that in turn made subgrants to the Southeast Arkansas Economic Develop- ment District, Inc. (subgrantee). A portion of the grant funds were used by the subgrantee to pay Federal Insurance Contributions Act (FICA) taxes (26 U.S.C. §§ 3101 et seq.) to the Internal Revenue Service (IRS). See 29 C.F.R. § 98.27c) (1981). Subsequently,

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