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Standards for Financial Management Systems

Commingling of Funds

Although Federal regulations do not require physical segregation of cash deposits, the accounting systems of all recipients and subrecipients must ensure that agency funds are not commingled with funds from other Federal or private agencies.

  • Recipients and subrecipients must account for each award separately.
  • Recipients and subrecipients are prohibited from commingling funds on either a program-by-program or project-by-project basis.
  • Funds specifically budgeted and/or received for one project may not be used to support another.
  • If the recipient's or subrecipient's automated general ledger accounting system cannot comply with this requirement, a system should be established to adequately track funds according to each budget category.

information iconFinancial Management Tip

Some programs, such as the Justice Assistance Grant program, require the deposit of funds into a trust fund. In addition, sometimes a high-risk designation will require a recipient to segregate awards into separate bank accounts.

If the recipient's or subrecipient's accounting system does not make it possible to identify funds and expenditures with a particular program (with the identification supported by source documentation), a site visit or an audit of that program may result in those costs being questioned or disallowed.