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12 <br />the Federal/State Government will not make a final determination about the <br />allowability and eligibility of any cost until an audit of the Project has been <br />completed. If the Federal/State Government determines that the Contractor is not <br />entitled to receive any portion of the Federal/State assistance the Contractor has <br />requested or provided, the Department will notify the Contractor in writing, stating its <br />reasons. The Contractor agrees that Project closeout will not alter the Contractor's <br />responsibility to return any funds due the Federal/State Government as a result of <br />later refunds, corrections, or other transactions; nor will Project closeout alter the <br />Federal/State Government's right to disallow costs and recover funds based on a <br />later audit or other review. Unless prohibited by Federal/State law or regulation, the <br />Federal/State Government may recover any Federal/State assistance funds made <br />available for the Project as necessary to satisfy any outstanding monetary claims <br />that the Federal/State Government may have against the Contractor. <br />d. Federal/State Claims Excess Payments Disallowed Costs, including Interest. <br />(1) Contractor's Responsibility to Pay. Upon notification to the Contractor that specific <br />amounts are owed to the Federal/State Government, whether for excess payments <br />of Federal/State assistance, disallowed costs, or funds recovered from third parties <br />or elsewhere, the Contractor agrees to remit to the Department promptly the <br />amounts owed, including applicable interest and any penalties and administrative <br />charges. <br />(2) Amount of Interest. The Grantee agrees to remit to the Department interest owed <br />as determined in accordance with N.C.G.S. 147-86.23. Upon notification to the <br />Contractor that specific amounts are owed to the Federal Government, whether for <br />excess payments of Federal assistance, disallowed costs, or funds recovered from <br />third parties or elsewhere, the Contractor agrees to remit to the Federal <br />Govemment promptly the amounts owed, including applicable interest, penalties <br />and administrative charges. <br />(3) Payment to FTA. Upon receipt of repayment from the Contractor, the Department <br />shall be responsible to remit amounts owed to FTA. <br />e. De-obligation of Funds. The Contractor agrees that the Department may de-obligate <br />unexpended Federal and State funds before Project closeout. <br />Section 11. Accounting Records. <br />a. Establishment and Maintenance of Accounting Records. The Contractor shall <br />establish and maintain separate accounts for the ARRA capital public transportation <br />program, either independently or within the existing accounting system. All costs charged <br />to the program shall be in accordance with most current approved Annual Budget and <br />shall be reported to the Department in accordance with UPTAS. <br />b. Documentation of Proiect Costs. All costs charged to the Project, including any <br />approved services performed by the Contractor or others, shall be supported by properly <br />executed payrolls, time records, invoices, contracts, or vouchers evidencing in detail the <br />nature and propriety of the charges, as referenced in 49 C.F.R. 18, the Office of <br />Management and Budget Circulars A-87, "Costs Principles for State, Local, and Indian <br />Tribal Governments" and A-102 "Grants and Cooperative Agreements with State and <br />Local Governments." <br />c. Allowable Costs. .Expenditures made by the Contractor shall be reimbursed as <br />allowable costs to the extent they meet all of the requirements set forth below. They must <br />be: <br />Revised 1/6/10 <br />