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<br />13. STATE FUNDS encumbered for PROJECT are available for liquidation only for <br />three (3) years from the beginning of the State Fiscal Year in which the funds were <br />appropriated in the State Budget. STATE FUNDS not liquidated within this period will <br />be reverted unless a Cooperative Work Agreement (CW A) is submitted by LOCAL <br />AGENCY and approved by the California Department of Finance in accordance with <br />Government Code Section 16304. <br /> <br />14. The estimated costs of PROJECT are shown in EXHIBIT A. LOCAL AGENCY <br />may, at its option, award contracts for amounts in excess of said estimates, and final <br />project expenditures may exceed said estimates if sufficient local funds are available to <br />finance the excess. It is understood that the allocation of STATE FUNDS shall not <br />exceed that shown in EXHIBIT A. <br /> <br />15. In the event LOCAL AGENCY'S final costs of PROJECT are less than said <br />estimate by reason of low bid or otherwise, the allocation of ST ATE FUNDS will be <br />decreased in relationship to the percent funded by STATE as shown in EXHIBIT A. <br /> <br />16. Exhibit C defined as the "Certification of State Funding" template, shall be made <br />a part of, and completed by STATE, prior to execution of this agreement. <br /> <br />17. Upon written demand by STATE, any overpayment to LOCAL AGENCY of <br />amounts invoiced to STATE shall be returned to STATE. <br /> <br />ARTICLE VI - Audits, Third Party Contracting, Records Retention and Reports <br /> <br />1. STATE reserves the right to conduct technical and financial audits of PROJECT <br />work and records when determined to be necessary or appropriate and LOCAL <br />AGENCY agrees, and shall require its contractors and subcontractors to agree, to <br />cooperate with STATE by making all appropriate and relevant PROJECT records <br />available for audit and copying as required by paragraph three (3) of Article VI. <br /> <br />2. LOCAL AGENCY, its contractors and subcontractors shall establish and maintain <br />an accounting system and records that properly accumulate and segregate incurred <br />PROJECT costs and matching funds by line item for the PROJECT. The accounting <br />system of LOCAL AGENCY, its contractors and all subcontractors shall conform to <br />Generally Accepted Accounting Principles; enable the determination of incurred costs at <br />interim points of completion; and provide support for reimbursement payment vouchers <br />or invoices sent to or paid by STATE. <br /> <br />3. For the purpose of determining compliance with Title 21, California Code of <br />Regulations, Chapter 21, section 2500 et seq., when applicable, and other matters <br />connected with the performance and costs of LOCAL AGENCY'S contracts with third <br />parties pursuant to Government Code Section 8546.7, LOCAL AGENCY, LOCAL <br />AGENCY'S contractors and subcontractors, and STATE shall each maintain and make <br />available for inspection and audit all books, documents, papers, accounting records, and <br />other evidence pertaining to the performance of such contracts, including, but not limited <br /> <br />7 <br /> <br />