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16.1 Chapter overview
Publication date: 20 Jul 2016
us Utilities guide 16.1
Many active government programs provide assistance and different forms of incentives to develop power and utility projects. Figure 16-1 highlights some of the more recent government programs available to utilities and power companies, as well as related accounting, auditing, and compliance considerations.
Figure 16-1
Summary of current energy-related government incentives
Summary of current energy-related government incentives
Program
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Description
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Accounting, auditing, and compliance considerations
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Investment tax credits (ITCs) and production tax credits (PTCs)
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• Can be elected on different types of renewable energy property
• Deadlines extended for many renewable technologies
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• ITC — grant accounting model may apply
• PTC — traditional tax credit accounting applies
• No specified audit or compliance requirements; however, subject to recapture
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Other cash grants
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• Cash grant may be received upfront or on a reimbursement basis
• Applies to a range of activities, including infrastructure and energy efficiency
• Federal, state, and local
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• Grant accounting model applies
• May be subject to numerous grant-specific or other government audit requirements
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16.1.1 Government grants
Government grants may include significant compliance requirements, including the potential for independent audits and audits by various government agencies. Assessing the probability that the reporting entity will be able to comply with all grant requirements is a key consideration in the recognition process (see UP 16.2.1). Therefore, reporting entities should have compliance programs and monitoring procedures that are sufficient to ensure ongoing compliance with the applicable requirements. Figure 16-2 provides a high-level summary of government grant compliance requirements.
Figure 16-2
Compliance, reporting, and audit requirements for government grants
Compliance, reporting, and audit requirements for government grants
Source of requirement
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Compliance and reporting requirements
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Audit requirements
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Code of Federal Regulations (CFR) and Federal Acquisition Regulation
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• Umbrella of rules and regulations (e.g., Title 10 of the Code of Federal Regulations (CFR) pertains to funding received by DOE)
• Key areas include: allowability of activities and costs; cash and property management; Davis-Bacon Act; general eligibility; cost sharing; use of funds; procurement, suspension, and debarment; real property rules
• Filing requirements include U.S. GAAP financial statements
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• Government entities and not-for-profit entities have specified audit requirements if more than $750,000 in federal spending in one year
• Other entities may have other audit requirements (such as in accordance with DOE guidelines)
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American Recovery and Reinvestment Act
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• Same requirements as CFR and Federal Acquisition Regulation, with additional focus on Buy American Act; Davis-Bacon Act; jobs creation/retention; Code of Business Ethics and Conduct; False Claims Act; lobbying restrictions, segregation of costs
• Filing requirements may include quarterly reporting on spending, project status, jobs creation, information on sub-awards and executive pay
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• Varies based on type of funding received |
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Grant-specific
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• Can vary; specified in the award
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• Can vary; specified in the award
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In addition to the requirements noted in Figure 16-2, there may also be requirements under the Internal Revenue Code, such as for tax credits (see UP 16.3 for more information on ITC). With respect to grants, the audit requirements can vary and audits may be performed by different parties. Reporting entities receiving government grants may be subject to one or more audits by government agencies, such as the DOE Inspector General, defense contract auditors, or external independent accountants. In general, the grant agreement will specify its audit requirements. However, it is possible the grant agreement will be silent on the topic and an audit still may be required under 10 CFR 600.316.
Reporting entities should refer to the grant agreement, other related agreements, and information on the DOE website for specific information about the grant being evaluated.
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