Transcript Developing Internal Controls For Post Secondary Institutions

Developing Internal
Controls For Post
Secondary
Institutions
Michael Brustein, Esq.
[email protected]
Erin Auerbach, Esq.
[email protected]
Brustein & Manasevit, PLLC
Spring 2012 Forum
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Types of Grants
• Direct Grants
• Any grant other than those that are distributed by formula to eligible
states. EDGAR § 75.1
• Ex: Gear-Up
• State Administered Grants
• Any grant that is distributed by formula to eligible states. EDGAR § 76.1
• Ex. Perkins, AEFLA
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Grant Management Starts with
Submission of Grant Application
• A grant application should be written so that it can be managed
within the regulations that apply.
• Control starts here.
• Review every grant application with a grants management eye
before submitting it.
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Post-Award Grants Control and Management
• Routine, predictable and consistent grants management will
help you:
• Meet your project goals
• Be accountable
• Be audit/monitoring ready
• Audits/monitoring a legal process
• Routine, consistent, accurate record keeping and review of
systems make audits and monitoring reviews run smoother!
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INTERNAL CONTROL “TOOLS”
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Continual Dialogue
Acceptance of Award
Management Meetings and Handbook
Internal Audit
Budget Controls
Time and Effort Records
Inventory Records
Matching Records
Managing Communications
Managing Audits and Monitoring Reviews
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Continual Dialogue
TOOL #1
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Continual Dialogue
• Discuss and Review with appropriate parties each grant as well as
samples of record keeping documents to ensure internal
understanding, agreement, commitment, and consistency.
• Appropriate parties: program and fiscal
• Forms/processes should be reviewed and updated regularly based
on new and changing institutional and funding agency information.
• Useful to the extent that they are applied consistently and correctly.
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Acceptance of Award
TOOL # 2
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Acceptance of Award
 Read and understand your Grant Award Notification (GAN)
 Be aware of:
 Applicable regulations
 Record keeping responsibilities
 Direct Grants:
 Whether or not formal acceptance is required, meet with appropriate
parties to be certain you want to accept.
 Make acceptance a conscious act. Things may have changed between
submission and notice of award – internally and externally.
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Management Meetings and Handbook
TOOL # 3
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Management Meetings and
Handbook
• Set up a schedule for management meetings involving the
grants office staff, finance staff, grant staff and partners, and
any internal compliance officer you may have.
• Length and complexity of grant will determine frequency.
• Have an up-to-date grants management handbook.
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First Meeting – New Grant
• Review the approved proposal
• Clarify Roles
• Review handbook and applicable federal, state, and college
regulations
• Agree on baseline data and data collection
• Discuss project and budget change process
• Set-up schedule for management meetings
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Routine Meetings – All Grants
• Keep everyone in the loop: finance, academic, procurement,
grants office, project staff, partners.
• Formal agenda
• Are you making adequate progress?
• Are you managing and spending grant funds properly?
• Are records up-to-date and audit–ready?
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Grants Management Handbook
Preparation:
• Outline of General Topics
• Cross-Cutting
• Programmatic
• Questions that frame the topics
• Identify current policy and procedure documents
• Identify staff members
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Grants Management Handbook
 Cross-Cutting
 Organizational Chart
 Financial Management System
 Budget
• Setting up the budget
• Budget and programmatic changes
 Source Documentation
 Cash Management
 Basic Cost Principals
 Allowable Costs
 Direct and Indirect Costs
 Timely Obligation of Funds
 Property Management
 Procurement
 Conflict of interest policy
 Record Keeping
 Payroll and Time Distribution
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Grants Management Handbook
• Programmatic:
• Key definitions
• Use of funds
• Accountability
• Reporting
• Evaluating project
• Programmatic Fiscal Requirements
• Supplement not Supplant, MOE, Matching, Hold Harmless
• Communications with Funding Agency
• Close-Out
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Grants Management Handbook
• Attachments:
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Forms and Samples
Proposal/GAN
Grant Budget
Grant-related correspondence
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Internal Audit
TOOL # 4
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Internal Audit
 New grant - Consider internal audit or review of grant in first
6 months, particularly if the grant is very large, match is
included, grant involves sub-recipients, or if it is multi-year
(risk factors)
 Continuing grant – Consider internal audit at regular
intervals
 Internal audit can be done anytime you have a concern or if
institution wants a comfort level that all is well with a large
or risky grant.
 Grant has additional restrictions that require additional
controls beyond what is standard for other college funds.
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Budget Controls
TOOL # 5
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Budget Controls
• Know terms and conditions of grant, required set-asides and caps
• Administrative funds
• Hold harmless
• Match
• Internal policies regarding budget creation and modifications
• Who signs off/reviews budgets and modifications
• Budget Records
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Budget Controls
• Pre-award costs
• EDGAR § 76.708
• Period of Availability
• Obligations
• Direct v. Indirect Costs
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Budget Control
 Must compare outlays with actual budget
 Budget Changes
 EDGAR § 74.45
 Prior approval required
 Change in project scope or objective
 Change in key personnel
 Absence for more than three months or 25% reduction in time devoted
to project
 Need for additional federal funding
 Transfer of amounts between direct and indirect costs
 Inclusion of costs requiring prior approval (OMB Circular A-21)
 Don’t assume approval will be received
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Budget Management
• Allowable Costs
• Necessary, reasonable, allocable
• OMB Circular A-21
• Advertisements
• Professional Development
• Travel
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Time and Effort Records
TOOL # 6
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Time and Effort Records
• OMB Circular A-21, Part J(10) – Compensation for personal services
• Professional/Professorial v. Other staff
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Time and Effort Records
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After-the-fact
Based on actual work performed
Account for total activity
Signature by employee or supervisor with first-hand knowledge
Coincide with one or more pay period
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Inventory Records
TOOL # 7
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Inventory Records
• Definition of Equipment
• All equipment must be inventoried
• “highly walkable” items
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Inventory Records
• Documentation
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Description
Serial number
Source
Title
Acquisition date
Percentage of federal participation
Location and condition
Acquisition cost
Disposition
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Inventory Records
• Inventory every two years
• Safeguards to prevent loss, damage or theft
• All differences must be investigated
• Implement adequate maintenance procedures
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Matching Records
TOOL # 8
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Matching Records
• After-the-fact
• Must be kept up-to-date, but can add to record later
• Use forms to document matching personnel and volunteer time,
supplies/goods, facilities, equipment, and funds donated
• Must be signed by person donating, project director, or person with
first-hand knowledge
• Method of valuation must be clear and keeping with the regulations
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Managing Communications
TOOL # 9
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Managing Communications
• Routine required reports
• Have a process for internal review prior to submission.
• These communications tell a story. Make story as accurate as
possible.
• Watch for consistency of language and data among the approved
proposal and required reports.
• Have policies in place for all communications including:
• Requests for changes
• Desk reviews/audits
• Site visits
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Managing Audits and Monitoring Reviews
TOOL # 10
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Managing Audits and Monitoring
Reviews
• Be prepared
• Can be prescheduled or a complete surprise
• Length and purpose/nature of visit
• Monitoring and Audits are legal processes. Must take them seriously.
• Form a response team, assign point of contact
• Visit agenda
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Desk Review
• Can be done by a program officer or contractor
• Their prep: Analyzing your approved grant proposal, your
programmatic and financial reports, any info they can access
from a distance.
• Your task: Respond to written questions and keep duplicates of
the records supplied. Keep notes on conversations. Follow-up as
needed.
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Site Visits/Program Reviews
 Program/grant officer; regional office staff; contracted reviewers
 Their prep: Analyzing your approved grant proposal/application,
your programmatic and financial reports, any info they can access
from a distance.
 Their interest: Documentation of project progress, programmatic
and fiscal compliance, internal controls.
 Your task: Arrange for requested access to records and people,
prep those to be interviewed, keep duplicates of all records
supplied.
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Audits
 One or more auditors
 Their prep: Stating the scope of the audit and analyzing your
approved grant proposal/application, your programmatic and
financial reports, and any info they can access from a distance.
 Their interest: Anything within the scope of the audit, or that
comes to their attention during the audit.
 Your task: Arrange for access to requested records and people,
keep duplicates of all records supplied.
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Audits and On-Site Monitoring
Reviews
 Records
 Finance records
 Source documentation
 Project director records
 Conducting Interviews
 Project staff and administrators
 Participants/Beneficiaries/Partners
 Visiting Project Sites
 Unless told otherwise – prepare sites
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Audits and On-Site Monitoring
Reviews
• Exit meeting with auditors/monitors
• Hold a debriefing meeting and safeguard notes and records.
Control communications through one person.
• Report with findings
• Response to Report
• If necessary – corrective action plan
• Implement corrective actions
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Questions??
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This presentation is intended solely to provide general
information and does not constitute legal advice.
Attendance at the presentation or later review of these
printed materials does not create an attorney-client
relationship with Brustein & Manasevit, PLLC. You should
not take any action based upon any information in this
presentation without first consulting legal counsel familiar
with your particular circumstances.
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