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  • Introduction Cell phones Length of session What they would like to “get” out of session Questions Position of participants Confidence level regarding financial matters
  • Explain why there is a difference in financial terminology between profit and nonprofit organizations
  • Financial Status Report – FSR 269A Commonly referred to as FSR Due semi-annually to CNCS via eGrants 30 days after end of period Reports cumulative information on Federal and grantee expenditures Reports on both cash and in-kind match Final FSR due 90 days after grant ends Payment Management System (PMS) Federal Cash Transactions Report (FCTR) 272: Due quarterly to Dept. of Health and Human Services 45 days after every quarter ends Reports only cumulative Federal disbursements If not submitted, access to funds are suspended
  • Outline the importance of becoming familiar with what information is derived from each statement. These statements will be present in audited financial statements, which are ones that management would use on a regular basis?? Don’t spend too much time on these slides……
  • OMB A-87 Required Documentation Activity reporting for State, Local, and Indian Tribal Governments: Budget estimates do not qualify as support for expenditures, except on an interim basis, provided that: The estimates produce reasonable approximation of the actual activity performed Quarterly comparison to actual activity is performed Budget estimates are revised at least quarterly to reflect changed circumstances OMB A-122 Required Documentation Activity reporting for non-profit organizations must: Reflect an after-the-fact distribution of each employee’s actual activity Account for the total activity of each employee Be prepared at least monthly and coincide with one or more pay periods Be signed by the employee or supervisor having first hand knowledge
  • Focus on the importance of non-financial staff understanding why receipts are necessary for expenditures. Team effort to accomplish effective financial management
  • Build on the difference between internal controls and written policies and procedures and why they work together. Develop and communicate rules of operations to employees and participants Ensure financial duties are properly segregated Maintain a clear audit trail from accounting system to financial reports Maintain safeguards over assets

Transcript

  • 1. Financial Literacy May 10, 2007 Jonnie M. Jenkins, CPA Walker and Company LLP
  • 2. Session Objectives Familiarize participants with definitions of financial terminology Provide an understanding of federal grants managements and the OMB Circulars Review an effective financial management system needed to successfully manage a CNS grant program Examine how weaknesses in financial management systems can cause instances of non-compliance and audit findings
  • 3. Why should I understand Financial Information?
    • Project Directors share responsibility for compliance
    • Accurate financial information is critical for decision making
    • Accurate financial management and reporting are critical for compliance with federal grants
  • 4. Effective Financial Management
    • Strong Financial Management Components
    • Comprehensive chart of accounts
    • Strong internal controls
    • Written policies and procedures
    • Proper documentation of expenditures
    • Strong Accountability & Compliance Components
    • Know of and comply with rules and regulations
    • Communication among fiscal and program staff
    • Timely & accurate financial information
  • 5. Financial Terminology What non-financial folks should know….
  • 6. Financial Terminology - Acronyms
    • CFR – Code of Federal Regulations
    • Direct Costs – Cost attributable to one specific program or funding stream
    • FCTR – Federal Cash Transaction Report
    • FSR – Financial Status Report
    • GAAP – Generally Accepted Accounting Principles
    • Indirect Costs – “Administrative Overhead”
    • OIG – Office of the Inspector General
    • OMB – Office of Management and Budget
    • PMS – Payment Management System
  • 7. Federal Grants Management Rules and Regulations
  • 8. Regulatory Requirements
    • Federal Rules and Regulations
      • AmeriCorps (AC)
        • 45CFR§§2520 - 2545
      • OMB Circulars
      • Code of Federal Regulations
  • 9. OMB Circulars
    • All Corporation grants are governed by Office of Management and Budget (OMB) Circulars. OMB establishes government-wide grants management policies and common rules.
    • Each grantee must comply with three specific circulars related to:
      • Cost Principles,
      • Administrative Requirements, and
      • Audit Requirements
  • 10. Summary of Relevant OMB Circulars http://www.whitehouse.gov/omb/grants/grants_circulars.html Circular No. A-133 Circular No. A-133 Circular No. A-133 Audits Circular No. A-87 Circular No. A-122 Circular No. A -21 Cost Principles 45 CFR 2541 & Circular No. A-102 45 CFR 2543 & Circular No. A- 110 45 CFR 2543 & Circular No. A- 110 Uniform Administrative Requirements State & Local Governments Non- Profit Organizations Educational Institutions
  • 11. Cost Principles
    • Established principles to determine allowable costs that can be charged under grants or contracts
    • Principles are designed so that Federal awards bear their fair share of costs recognized under these principles
    • Provide guidance about reimbursement requirements
    • Provide uniform standards of allowability and allocation
    • Encourage consistency of treatment of costs
  • 12. Factors affecting allowability of costs
    • To be allowable under an award, costs must meet the following general criteria:
      • Be reasonable, ordinary, necessary and allocable under OMB principles.
      • Conform to any limitations set forth in OMB principles or in the award as to types or amount of cost items.
      • Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the organization.
  • 13. Factors affecting allowability of costs
    • To be allowable under an award, costs must meet the following general criteria:
      • Be accorded consistent treatment.
      • Be determined 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.
  • 14. Administrative Requirements
    • Provide consistency and uniformity among Federal agencies in the management of grants and cooperative agreements.
    • Specific grantmaking requirements for CNCS are in the Code of Federal Regulations (CFR).
  • 15. Administrative Requirements
    • Examples of items addressed in Circulars
      • Pre-Award policies
      • Special award conditions
      • Purpose of financial and program management
      • Standards for financial management systems
      • Cost sharing or matching
  • 16. Audit Requirements
    • OMB-133 Audit
      • Standards for obtaining consistency and uniformity among Federal agencies for the audit of organization’s expenditure of Federal funds.
      • Applicable to organizations that expend $500,000 or more of federal funds in a fiscal year.
  • 17. Financial Reporting
  • 18. Federal Financial Reports
    • Financial Status Report
      • Report that summarizes federal expenses, match and volunteer hours (for Senior Corps) submitted to CNCS via eGrants
    • Federal Cash Transaction Report
      • Report that verifies cash disbursements and reports cash on hand submitted to HHS via the Smartlink System
    • Grant Budget
      • Tool to describe how grantees will utilize their Federal and local resources in meeting their program goals and objectives
  • 19. Financial Terminology
    • Financial Statements
      • Statement of Financial Position
        • Also known as “Balance Sheet”
        • Assets, or items “owned” by the organization
        • Liabilities, or items “owed” to another organization
        • Net Assets, what is “left over” after all liabilities have been paid
        • Represents a specific point in time
  • 20. Financial Terminology, Cont.
    • Statement of Activities
      • Also know as “Income Statement”
        • Reports the Revenues and Other Support, “inflows” of resources to the organization
        • Reports the Expenditures, “outflows” of resources from the organization
        • Reflects the outcome of the period reported for Surplus/Deficit, also known as “profit or loss”
        • Summarizes transactions over a specified period of time
  • 21. Financial Terminology, Cont.
    • Statement of Cash Flows
      • Reports cash flows in and out of the organization
        • Categorized by: Operating, Financing and Investing Activities
        • Traces cash from the ending balance of the prior statement to the current ending balance
    • Statement of Functional Expenses
      • Distributes expenses across departments, activities or divisions of an organization as represented in the Statement of Activities
  • 22. How can I use the financial information?
    • Review to ensure accuracy and increase internal controls
    • Used to complete external reports, i.e. FSRs
    • Used to monitor status of matching funds
    • Used to insure budget controls
  • 23. Internal Financial Reporting
    • Organization needs to determine
    • What reports and information are needed?
    • Who should be involved in the review? (i.e.. Executive Director, Project Directors, Managers?)
    • How often should the information be reviewed?
    • How can the information be utilized to inform actions?
  • 24. External Financial Reporting
    • Organization should list and itemize
    • Types and frequency of required financial reports
    • Due dates
    • Review process to ensure all reports are complete, submitted timely, and accurately.
    • Roles for the program and fiscal staff of the organization
  • 25. Effects of Ineffective Financial Management Systems Deficiencies/Audit Findings
  • 26. Common Deficiencies
    • Inadequate documentation of expenses
      • Salaries and Wages
      • Match & In-kind
    • Lack of allocation plans
    • Lack of internal controls and separation of duties
    • Inappropriate accounting, charging costs to improper time period
    • Late or incomplete Financial Status Reports that do not reconcile to accounting system or HHS
    • Inadequate systems for member documentation requirements (background checks, evaluations and time tracking)
    • Sub-recipient monitoring
  • 27. Time and Activity Reporting
      • All salaries and wages charged to CNCS grants must be supported by signed time & attendance records that allocate time to appropriate funding source
      • Exceptions:
        • State, local and Indian tribal governments must comply with requirements of OMB A-87
        • Educational Institutions must comply with requirements of OMB A-21
      • Time must be based on after-the-fact activity not on a predetermined basis or on the budgeted amount
  • 28. Effective Financial Management
    • Documentation of Expenditures
      • All expenditures should contain documentation (i.e. brief descriptions, agendas, etc.) that support why transaction is allowable for grant purposes
      • Accounting records should trace back to source documentation
      • Documentation should also ensure that costs:
        • Conform to grant/contract limitations
        • Are treated consistently
        • Determined in accordance with Generally Accepted Accounting Principles (GAAP)
  • 29. Effective Financial Management, Cont.
    • Internal Controls
      • Codes of Conduct
      • Process of communicating written policies and procedures
      • Examples
        • Comprehensive written policies and procedures
        • Organizational Chart
        • Chart of Accounts
        • Job Descriptions
        • Organizational Documents
  • 30. Questions
  • 31. For Additional Information
    • Jonnie M. Jenkins, CPA
    • Walker and Company
    • [email_address]
    • (202) 363-9300