Transcript Financial & Grants Management Basics: 101

Financial & Grants
Management Basics: 101
Session Objectives
Learn basic financial and grants management
Review reimbursing, reporting, and
rebudgeting issues
Learn about common audit pitfalls & issues
10. Grant
Closeout
8. Reimbursing,
Reporting, and
Rebudgeting
7. Cash &
In-Kind Match
1. Regulations
& Requirements
Grants &
Financial
Management
Basics: 101
6. Documenting
Expenses
5. Administrative
Costs
2. Financial
Management
Principles
Regulations & Requirements
Nat’l & Community Svc. Act of 1990
Code of Fed. Regulations (CFR)
OMB Circulars (part of CFR)
State & Local Regulations
Provisions
Certifications and Assurances
Notice of Grant Award
Proposal & Budget
Notice Of Funding Opportunity
5
Changes to the OMB Circulars
• The OMB Circulars were first published
in 1952
• In 2005, grants management circulars
were incorporated into the Code of
Federal Regulations (CFR)
• The content and information is the
same; however, the guidelines were
streamlined and changed for
consistency
Grant Guidelines
Effective May 11, 2004 and August 31, 2005
Federal
Grant Guidelines
Administrative
Requirements
Cost Principles
Audit
Requirements 
Universities
§ 45 CFR 2543
§ 2 CFR 215
(formerly A-110)
States, Local,
Indian Tribal
Governments
Non-Profits
Hospitals
§ 45 CFR 2541
OMB A-102
§ 45 CFR 2543
§ 2 CFR 215
§ 45 CFR 2543
§ 2 CFR 215
(formerly A-110)
(formerly A-110)
§ 2 CFR 220
§ 2 CFR 225
§ 2 CFR 230
§ 45 CFR 74
(formerly A-21)
(formerly A-87)
(formerly A-122)
(HHS regulations)
OMB A-133
OMB A-133
OMB A-133
OMB A-133
Notes:
CFR = Code of Federal Regulations
 = Organization is subject to A-133 if it expends more than $500,000 of Federal funds in
its fiscal year
Locate Grants Management Circulars: www.whitehouse.gov/omb/grants_circulars/
When do I use OMB Circulars?
The Circulars provides guidance and
requirements relevant to the Federal
grants in these areas:
• Cost Principles
• Administrative Requirements
• A-133 Audits
Cost Principles Requirements
• Provide guidance to determine the allowable costs
incurred by organizations under Federal grants
• Designed so that Federal awards bear their fair share
of costs
• Provide guidance about reimbursement requirements
• Provide uniform standards of allowability and
allocation
• Encourage consistency of treatment of costs
• 54 selected items of cost
Cost Principles
Examples of Costs in CFRs:
• Advertising and public relations costs
• Compensation for personal services
• Memberships, subscriptions, and professional
activity costs
• Recruiting costs
• Rental costs
• Training and education costs
• Travel costs
Administrative Requirements
• Provide consistency and uniformity among
Federal agencies in the management of grants
and cooperative agreements
• Required all Federal agencies to issue a grants
management common rule to adopt
government-wide terms and conditions
 Specific grantmaking requirements for CNCS
are in the CFRs
Administrative Requirements
Examples of items in CFRs:
•
•
•
•
•
•
Pre-award policies
Special award conditions
Purpose of financial and program management
Standards for financial management systems
Cost sharing or matching
Program income
A-133 Audit Requirements
• Provide the standards for obtaining consistency
and uniformity among Federal agencies for the
audit of organizations expending Federal funds
• Apply to all organizations that expend $500,000
or more of Federal funds in a year
CNCS Grant Provisions
•
•
•
•
•
Are issued by CNCS with the Notice of Grant Award
Are the guiding principles for CNCS-funded grants and
cooperative agreements
Contain program and financial guidelines
Are binding on the grantee and subgrantee in the same
manner
The order of precedence if inconsistencies exists is:
1.
2.
3.
4.
Notice of Grant Award
AmeriCorps Special Provisions
General Provisions
Approved Grant Application
CNCS Grant Provision Requirements
Examples of items in the Provisions:
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•
•
•
•
•
•
•
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Member Recruitment, Selection, and Exit
Living Allowances, Other In-Service Benefits, and Taxes
Member Records and Confidentiality
Budget and Programmatic Changes
Reporting Requirements
Responsibilities under Grant Administration
Financial Management Standards
Program Income
Safety
Financial Management
Principles
Efficient Accounting System
Efficient Accounting System
Accounting System must be capable of:
• Distinguishing between grant verses non-grant
related expenditures
• Identifying costs by program year
• Identifying costs by budget category
• Differentiating between direct and indirect costs
(administrative costs)
• Accounting for each award/grant separately
Accounting System that properly
segregates funds
Accounting System
Department of Education Grant
Grant 1
AmeriCorps Grant
Grant 2
Ford Foundation Grant
Grant 3
NOT
Efficient Accounting System
Accounting System must be capable of:
• Distinguishing Federal funds separately from grant
funds
• Recording in-kind contribution as both revenues and
expenses
• Easily provide management with financial reports at
both the summary or detailed levels
• Comparing outlays with budget amounts for each
award (budget vs. actual reports)
• Correlating financial reports submitted to CNCS
directly to accounting information and supporting
documents
Allowable, Reasonable,
Allocable, and Consistent Costs
Allowable - What does it Mean?
To be allowable under a grant, costs must:

Be reasonable and allocable for the performance of the
award

Conform to grant award limitations or cost principles

Be consistent with policies and procedures that apply to
both federally-financed and other activities of the
organization

Be given consistent treatment

Be in accordance with Generally Accepted Accounting
Principles (GAAP)

Not be included as a cost or used to meet cost sharing or
matching requirements of any other federally-financed
program

Be adequately documented
Example – Allowable?
• The Program Director of BEST AmeriCorps program
decided to host a very important meeting at his home
and serve beer and pizza hoping that everyone would
attend.
• The purpose of the meeting was to discuss changes in
the new CNCS Grant Provisions that affected the
program.
• Because it was a business meeting he decided to
charge the cost of the beer and pizza to the
AmeriCorps grant, especially since he was providing
the use of his home.
Allowable?
Reasonable - What Does it Mean?
A cost is reasonable if:
• It does not exceed what a prudent person would do under
the circumstances at the time the decision was made to
incur the cost
• Consideration should be given to:
– Whether the cost is ordinary and necessary for the operations of
the organization
– The restraints or requirements imposed by generally accepted
sound business practices
– Whether the individuals concerned acted with prudence
– Significant deviations from established practices which may
unjustifiably increase the award costs
Example – Reasonable?
• BEST AmeriCorps program needs 5 laptop computers for the
program so that members can learn basic computer skills.
• When deciding on the model that would best suit its needs, the
Program Director received three price quotes on various models
and two were within the same general price range of $650 - $700.
However, one laptop appealed to him most – it met all of the
necessary specifications plus being the “techie” he was it had
many other “nice to have” features, such as built in webcam and
mobile broadband, a 21” Hi-Def widescreen, and 8 built-in
speakers and a subwoofer.
• Although the basic models were adequate, the more appealing
one was $2,999, on sale, and came in crimson red, the BEST
AmeriCorps program’s team color, so the Program Director
ordered 5 of these laptop computers.
Reasonable?
Allocable - What Does it Mean?
A cost is allocable:
• Based on its relative benefits received
• If it is treated consistently with other costs incurred for the
same purpose in like circumstances and if it:
– It is incurred specifically for the award
– Benefits both the award and other work and can be distributed in
reasonable proportion to the benefits received or
– Is necessary to the overall operation of the organization
Any cost allocable to a particular award
may not be shifted to other Federal awards
to overcome funding deficiencies, or to avoid restrictions
imposed by law or by the terms of the award
Example – Allocable?
• When the crimson red laptops finally arrived, the
Program Director found that funds allocated for
supplies for the BEST AmeriCorps program were fully
expended.
• Although the laptops were to be used only for the
AmeriCorps program, BEST had another CNCS
funded program through a Learn & Serve America
program, so the Program Director told the accountant
to charge the cost to the Learn & Serve America
program since CNCS was also funding that program.
Allocable?
Consistent - What Does it Mean?
Grantees must be consistent in assigning costs:
• Whether a direct cost or an indirect cost
• Regardless of the source of funding, i.e., federally or nonfederally sponsored activities, and
• Following written cost allocation plan, as applicable
Key wording in the cost principles:
• Consistent with that paid for similar work in the organization’s
other activities
• Distributed to awards and other activities in a consistent pattern
• The organization must follow a consistent, equitable procedure
• Charges must be consistent with those normally allowed in like
circumstances in the organization’s non-Federally-sponsored
activities
Example – Consistently Applied?
• The BEST AmeriCorps program was running low on
office supplies and postage stamps.
• Since the Program Director couldn’t wait any longer for
the office manager to provide the supplies, he
purchased them and charged them to the AmeriCorps
grant.
Consistently Applied?
Policies & Procedures
Policies & Procedures
• Policies and procedures are a set of written documents
that describe an organization's
 policies for operation – “what is to be done”
 the procedures necessary to fulfill the policies – “how it is to be
completed”
• All staff must be familiar with these documents
• Documents must be kept up-to-date
• Documents should explain the rationale and include
principal transactions and completed forms
• Documents must incorporate Federal and CNCS grant
regulations and provisions
Policies & Procedures
• Required by Federal grant regulations
• Non-profit organizations have additional
requirements – Form 990 submitted to IRS
• Other Key Policies & Procedures to document
• AmeriCorps Programs
See Handout
Helpful guide and handbook for developing Policies and Procedures
See Grantee
Central
CD provided
in 2008
Internal Controls
Are You an Internal Control User?
When you leave home in the morning
to go to work,
do you lock the doors to your house?
_____________
If you do, that's your own "internal control"
to safeguard the assets
you own in your home
Congratulations,
you are an internal control user!!
Why Have Internal Controls?
• Improve accountability to customers
–
CNCS, trustees, funders, public
• Help organization achieve performance & budget
targets
• Improve reliability of financial reporting
• Improve compliance with laws & regulations
• Prevent loss of resources & public assets
• Prevent loss of public trust
• Reduce legal liability
Who is Responsible?
Everyone within the organization has some role in internal controls
Roles vary depending upon level of responsibility:
• Executives establish the presence of integrity, ethics,
competence and a positive control environment
• Directors and department heads have oversight
responsibility for internal controls within their units
• Managers and supervisory personnel are responsible
for executing control policies and procedures at the detail
level within their specific unit
• Each individual within a unit is to be cognizant of proper
internal control procedures associated with their specific
job responsibilities
Elements of Internal Controls
Internal control systems operate at different levels of effectiveness
Determining effectiveness is based on an assessment of whether these
5 components are present and functioning:
1. Control Environment – sets the tone of an organization
2. Risk Assessment – identifying & analyzing internal and external risk
3. Control Activities – management’s directives carried out through
policies and procedures
4. Information and Communication – providing timely information to the
right people down, across, and up
5. Monitoring – assessing the quality of the system’s performance over
time
Administrative Costs
Definitions
Direct Costs
Indirect/
Administrative
Costs
Specific expenses related to the
operations of a specific project
General expenses related to
overall administration of an
organization receiving CNCS funds
Expenses incurred for common
or joint objectives and cannot be
readily identifiable with a specific
project or cost objective
What are Direct Costs?
• Allowable direct expenses for members, e.g.,
living allowances and insurance costs
• Costs for staff who train, place, or supervise
• Member’s benefit programs
• Evaluations of programs
• Supplies and Facility costs
• Travel
What are Administrative Costs?
• Accounting, auditing, contracting, budgeting, and
general legal services
• Facility occupancy costs, e.g., rent, utilities,
insurance, taxes, and maintenance
• General liability insurance that protects the
organization (not directly related to a program)
• Director’s and Officer’s liability insurance
• Depreciation on building & equipment
• Office Supplies
• General & Administrative salaries & wages
What cannot be included as
Administrative Costs?
≠ Bad debts
≠ Entertainment costs
≠ Fines and penalties
≠ Fundraising
≠ Interest on borrowed capital
≠ Lobbying
≠ Relocation Costs
≠ Taxes
CNCS 5% Administrative Rate
Option 1
Use the CNCS “fixed 5%”
Administrative costs are limited by statute:
 Costs cannot exceed 5% of total Corporation share
 Grantees may charge up to 5% of the total CNCS
funds expended, provided that the grantee’s
administrative match does not exceed 10% of all direct
costs
 CaliforniaVolunteers Guidelines:
 4% = Subgrantee
 1% = CaliforniaVolunteers
Federally Approved Indirect Cost Rate
Option 2
Use the Federally approved
Indirect Cost Rate
Obtaining a Federally Approved
Indirect Cost Rate
1. Can my organization have an indirect cost
rate?
•
Yes. If your organization is a direct recipient of
Federal grant funds
•
No. If your organization receives only passthrough Federal grant funds, then your
organization is limited to using the 5% and 10%
fixed rates stipulated for CNCS grants
Documenting Administrative Costs
1.
Using the CNCS 5% Rate (45 CFR 2540.110)
• Not subject to supporting cost documentation
• “Not Auditable”? If direct costs charged to CNCS are
questioned, and deemed unallowable:
–
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•
2.
Payback funds for disallowed direct costs
Payback funds for administrative costs claimed based on the
disallowed direct costs
Unreimbursed indirect costs may be applied to
meeting operational matching requirements
Using a Federally Approved Indirect Cost Rate
• Must maintain related supporting
documentation for audit
• Charges are based on documented expenses
Documenting Expenses
Document, Document, Document
Allowable
Allocable
Reasonable
Consistently Applied
Documentation Basics
Why Retain Documentation?
•
To track incoming information
•
To review information
•
To provide historical evidence
•
To provide evidence of accomplishments
•
To assist during the audit or site visit
Establish a written record retention policy
See Handout
Defining Source Documentation
• Physical information:
– Hard copy
– Soft copy: CD, flash drive, server, microfilm
• Source:
– Internal to the organization
– External sources
• Benefits  supports a value, cost, or performance
criteria relative to the grant
CaliforniaVolunteers may request this during site visits or desk reviews
Key Documentation Issue
Salary
•
Signed timesheets with supervisory approval
•
Quarterly payroll returns (941)
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Payroll register
•
Personnel file with salary/wage information
•
Employment contract
•
Cancelled checks
•
Direct deposit schedule
See Handout
Reimbursements, Reporting &
Rebudgeting
Reimbursements
 Reimbursement is made based on actual expenses
 Reimbursements may not be for estimated,
unauthorized, or unallowable expenses
 Invoices must be for approved and budgeted
expenditures that programs have already incurred
 No advances allowed
Reimbursements
Subgrantees/Programs must submit:
•
3 Copies = CaliforniaVolunteers Invoice Form
(CV 100)
•
3 Copies = Periodic Expense Report (PER)
CaliforniaVolunteers allows monthly or quarterly reimbursement
but program must designate which method it will use
Reimbursements
Must also have up-to-date and current:
1. Member hours in WBRS
2. PERs
3. FSRs
4. Program Reports
Must also demonstrate compliance with program
operations, i.e., no outstanding corrective action
Reimbursements
AmeriCorps Grant Provisions
“Financial management systems must be
capable of distinguishing expenditures
attributable to this grant from expenditures not
attributable to this grant. The systems must
be able to identify costs by programmatic year
and by budget category and to differentiate
between direct and indirect costs or
administrative costs.”
 Record in-kind contribution as both revenues and expenses
Reimbursements
AmeriCorps Grant Provisions
“A living allowance is not a wage. Programs must not
pay a living allowance on an hourly basis. Programs
should pay the living allowance in regular increments,
such as weekly or bi-weekly, paying an increased
increment only on the basis of increased living
expenses such as food, housing, or transportation.
Payments should not fluctuate based on the number
of hours served in a particular time period, and must
cease when a member concludes a term of service.”
No “lump sum” if member completes term early
No “lump sum” if member starts late, e.g., “make up” missed payments
Payments from CaliforniaVolunteers
30 Days = Target Date
–
Reimbursement may take up to 45 days
Reimbursement requests received after due date
will be processed in the following month
Delays Occur Because:
–
–
–
–
–
Incomplete or incorrect invoices
Insufficient match
Missing documentation
Failure to update member hours in WBRS or to
correctly submit them
Failure to submit Progress Report
Key Elements of Financial Reporting
• Prepare all financial reports with information
from the organization’s accounting system
• Review and reconciliation the information to
ensure accuracy prior to report submission
• Files must have the proper documentation to
support all information reported in financial
reports
• Submit all reports on time
Reporting Requirements
1. Periodic Expense Report (PER)
• Due to CaliforniaVolunteers office by the
25th day of the each month or quarter
• Must be submitted via hard copy
• 3 copies of the PER are required
• Required documents include: PER and
invoice cover sheet
Failure to submit the PER on time will result in reimbursement delays
Reporting Requirements
2.
Financial Status Report (FSR)
• Due to CaliforniaVolunteers office by the 15th day
after the end of the reporting period
• Must be submitted via hard copy
• One (1) copy of the FSR is required
• Required documents include:
•
•
Program Income Form
Submission of all PERs for reporting period
Late Reports?
Prior to the due date
1. By e-mail, request an extension
2. Provide reason why an extension is needed
3. State expected date of completion
PERs and FSRs
– Submit extension request to Grants
Management Associate (Jesse Delis)
Program Income
Program Income Form
•
There are 2 alternatives to use program income:
1. Additive – added to funds committed to the
program and used to further program objectives
2. Deductive – deducted from total allowable costs
of the program to determine the net allowable
costs for which the Federal share is based
Program Income
• Gross Program Income – All funds collected as
a direct result of grant funded-activities
• Net Program Income – The amount after
deducting costs associated with generating the
income
• All Program Income must be used for grantrelated purposes
• Program Income and the supporting
documentation is “auditable”
Key Reporting Issues
• Program Income
– These were the common errors found on the
April 30, 2009 Program Income Forms
• Program Income used as match was erroneously
reported as Program Income
– Corrective Action: If all your program income was used
as match, your Program Income Form should be blank
• Program Income Form was not submitted at the
same time as the FSR
– Corrective Action: Submit the FSR and the Program
Income Form at the same time, not separately
Rebudgeting
CaliforniaVolunteers must receive written approval from
CNCS for these budgetary changes:
– Specific costs requiring approval under the cost principles,
such as:
• Overtime pay, rearrangement and alternation costs, and preaward costs
– Purchases of equipment over $5,000 using CNCS funds,
unless specified in the approved application and budget
– Changes in the cumulative budget line items that amount to
10% or more of the total budget, unless the CNCS share is
$100,000 or less
• The total budget includes both the CNCS and grantee shares
• Grantees may transfer funds among approved direct costs
categories when the cumulative amount of such transfers do not
exceed 10% of the total budget
CaliforniaVolunteers
Key Rebudgeting Issues
• Budget changes are made before
CaliforniaVolunteers approved the change
• Adequate written justification was not provided
• Budget Revision Request Form was incomplete
• Inadequate monitoring of budget throughout the
year resulted in major budget changes at yearend, instead of periodically throughout the year
CaliforniaVolunteers
Rebudgeting Requests
Submit a Budget Revision Request Form (CV 200)
• Narrative justification – explain why a redistribution of funds is
needed
• Spreadsheet with the original CNCS share budget, proposed
budget, and difference between two budgets
• Spreadsheet with the original Subgrantee share budget,
proposed budget, and difference between two budgets
• Must be signed by the Program Director and faxed to
CaliforniaVolunteers Program Associate
• Program Associate reviews it and approves program changes
and the Grants Management Associate reviews it for fiscal
accuracy
• CaliforniaVolunteers will either approve or deny – wait to take
action only after receiving approval
Rebudgeting Pointers
Your budget = estimate of expected costs
• Estimates may change as the program is
implemented
• Review budget monthly
• Request budget revisions promptly
• Do not wait until last month of year to request
budget modification
Federal Audits:
OIG and A-133
What is an Audit
Examines a Corporation program or activity
1.
Financial Audits
• Audits of costs incurred on grants and contracts,
indirect costs, and internal controls
2.
Performance Audits
• Audits of economy and efficiency of programs
– Measure achievement of desired results or
benefits
Office of Inspector General
What’s the OIG Audit Process?
1. Notification Letter in writing
2. Entrance Conference
•
To provide audit scope and objectives
3. Survey Phase (planning phase)
•
To obtain grantee’s background, mission,
resources, responsibilities, key personnel,
operating systems and controls
What’s the OIG Audit Process?
4. Develop the Audit Program
•
A set of procedures for auditors to follow
5. Field Work
•
Auditors complete the audit following the
procedures in the audit program
6. Exit Conference
•
A verbal briefing of auditor’s findings work with the
opportunity to confirm information, ask questions,
and obtain clarifying information
What’s the OIG Audit Process?
7. Draft Report
•
Issued to the auditee and Corporation officials a
request to provide written comments in 30 days
8. Corporation & Grantee Response
•
The Corporation and Grantee each respond in
writing to the draft report and comments are
published in the final report
9. Final Report
•
Issued after reviewing auditee’s and Corporation’s
comments with complete description of findings and
recommendations for corrective action
Common Pitfalls & Issues
7 Main Areas:
1.
2.
3.
4.
5.
6.
7.
Member Eligibility
Member Files & Records
Member Costs
Match
Reports
Administrative Areas
General Management
See Handout
OIG Hotline
Report suspected fraud, waste, or abuse
All Information is confidential
You can remain anonymous
1-800-452-8210
or
[email protected]
Website: www.cncsig.gov
Grant Closeout
CaliforniaVolunteers:
Annual Closeout Procedures
CaliforniaVolunteers closes all subgrants on an
annual basis:
1. Fiscal Activities
2. Program Activities
Program staff and Fiscal staff must coordinate Closeout activities
CaliforniaVolunteers Annual
AmeriCorps Closeout Procedures
Fiscal Activities
1. Final Reimbursement Invoices - Due within 60 days of grant
termination
•
•
Review all obligations to ensure all expenses have been paid
Final invoices will only be processed for payment after the
program submits all required documentation attesting to the
completeness of member records and the retention site
• Errors in reimbursement requests (over or under) discovered
after closeout must be brought to the attention of the
Commission ASAP for resolution
2. Final PER = Due within 60 days of grant end
3. FSR = Due by April 15th following end of grant
CaliforniaVolunteers Annual
AmeriCorps Closeout Procedures
Program Activities
There are 7 steps needed to complete the programmatic closeout
of your grant. They are:
1. Verification of complete and accurate entry of member time logs
into WBRS for each AmeriCorps member in your program
2. Verification that all Exit Forms have been entered into WBRS for
all AmeriCorps members in your program
3. Print out a program reconciliation report from WBRS to verify that
all members have been exited with appropriate education award
CaliforniaVolunteers Annual
AmeriCorps Closeout Procedures
Program Activities
4. Review of all member files and submission of Member Files
Closeout Certification Form
5. Completion of final Progress Report
•
Due 15th day after the program end date
6. Submission of printed final Progress Report, signed and dated by
Program Director
7. Submission of cover letter, on letterhead, that steps 1-6 are
completed, including information where files will be stored and the
process for document retrieval in the event of an audit
Final Grant Closeout
CaliforniaVolunteers must:
1.
2.
3.
4.
5.
6.
Pay outstanding obligations
Close subgrants
Ensure FFR and PSC-272 are equal
Enter final FFR in eGrants
Submit closeout documents to CNCS
Return unobligated funds
CV cannot fix problems or return funds after funds
have been returned to the Federal Government
Final Grant Closeout
Subgrantee must:
1. Submit Final FSR
2. Submit Equipment Inventory Form
3. Submit Residual Supplies Form
4. Submit Progress Report
CNCS: Deobligating Funds
• CNCS will deobligate any authorized grant funds not drawn
down at the end of the project period
• Deobligation reduces the amount of authorized funds to
equal the amounts disbursed and drawn down for the
grantee and its subgrantees
• Grantees do not have access to deobligated funds
CNCS: Subsequent Audit
• CaliforniaVolunteers and CNCS retain right to
conduct a subsequent audit or other review of a
grant – closeout does not change this right
• Notice of audit may extend the 3 year record
retention requirement
Subgrantees and Grantee must:
• Retain all records for 3 years from when the Commission
(grantee) submits the final FSR
• Requirement is included in the CNCS Grant Provisions
Questions?