Financial Reporting Presentation (PPT)


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Financial Reporting Presentation (PPT)

  1. 2. Financial Grants Management, Reporting and Accountability Anthony DeColli, Sr. Grants Specialist Corland Forrester, MBI Consulting
  2. 3. Session Objectives Understanding federal regulations Learning the HHS Payment Management System Preparing cash management reports
  3. 4. 6 Thinking Hats of Grant Financial Management From Edward de Bono “six thinking hats” <ul><li>Auditor </li></ul><ul><li>Accountant </li></ul><ul><li>Bookkeeper </li></ul><ul><li>Grants Officer </li></ul><ul><li>Executive Director or Manager </li></ul><ul><li>The Public Citizen </li></ul>
  4. 5. Reports Financial Records Budget Allowable Costs FSR 269-A PSC 272 Trial Balance Work Statements Ledger Journals Source Document Program Authorized OMB Circulars GMO Determined Tailoring the Budget Clarifying Objectives Reviewing the Budget
  5. 6. Summary of Relevant OMB Circulars 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
  6. 7. Allowable <ul><li>Conforms to any limitations or exclusions set forth in the OMB Cost Principle circulars or in the award as to types or amount of cost items. </li></ul><ul><li>Is determined in accordance with generally accepted accounting principles (GAAP). </li></ul>
  7. 8. Allocable <ul><li>A cost is allocable to a particular cost objective in a grant, contract, project, service, or other activity, in accordance with the relative benefits received. </li></ul><ul><li>A cost is allocable to a Federal award if it is treated consistently with other costs incurred for the same purpose in similar circumstances. </li></ul>
  8. 9. Reasonable <ul><ul><li>A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. </li></ul></ul>
  9. 10. Necessary <ul><li>The cost is of a type generally recognized as ordinary and necessary for the operation of the organization or the performance of the award. </li></ul>
  10. 11. Consistent <ul><li>Is consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the organization. </li></ul>
  11. 12. Standards of Allowability <ul><li>Reasonable </li></ul><ul><li>Allocable </li></ul><ul><li>Authorized and legal </li></ul><ul><li>Limits on costs </li></ul><ul><li>Consistent Treatment </li></ul><ul><li>Accounting Principles </li></ul><ul><li>Not Double Charged </li></ul><ul><li>Net of applicable credits </li></ul><ul><li>Documented </li></ul><ul><li>Cost Accounting Standards. </li></ul>
  12. 13. Determining Allowability <ul><li>If the Item is in the approved budget and project description, then it is (Necessary) </li></ul><ul><li>If the item has gone through the Procurement Decision-Making Process or meets the OMB standards then it is (Reasonable) </li></ul><ul><li>If the item has links to the financial system and cost objective then it is (Allocable) </li></ul><ul><li>Necessary Reasonable Allocable = Allowable </li></ul>
  13. 14. 4 Causes of Questioned Costs <ul><li>Unallowable </li></ul><ul><li>Undocumented </li></ul><ul><li>Unreasonable </li></ul><ul><li>Unapproved </li></ul>
  14. 15. Timing and Use of Federal Funds
  15. 16. HHS/PMS as a Disbursing Agent <ul><li>PMS was developed to create a central system that is capable of paying most Federal assistance grants, block grants, and contracts. The system serves as the fiscal intermediary between awarding agencies and the recipients of grants and some types of contracts, with particular emphasis on: </li></ul><ul><ul><li>Expediting the flow of cash between the Federal government and recipients; </li></ul></ul><ul><ul><li>Transmitting recipient disbursement data back to the awarding agencies; and </li></ul></ul><ul><ul><li>Managing cash flow advances to grant recipients. </li></ul></ul>
  16. 18. Purpose of Cash Management <ul><li>Cash management is the stewardship or proper use of an entity’s cash resources. It serves as the means to keep an organization functioning by making the best use of cash or liquid resources of the organization. </li></ul>
  17. 19. The Function of Cash Management <ul><li>To eliminate idle cash balances. Every dollar held as cash rather than used to augment revenues or decrease expenditures represents a lost opportunity. Minimizing idle cash balances requires accurate information about expected receipts and likely disbursements. </li></ul><ul><li>To deposit collections timely. Having funds in-hand is better than having accounts receivable. The cash is easier to convert immediately into value or goods. A receivable, an item to be converted in the future, often is subject to a transaction delay or a depreciation of value. Once funds are due, they should be converted to cash-in-hand immediately and deposited as soon as possible. </li></ul><ul><li>To properly time disbursements. Some payments must be made on a specified date. For such payments, there is no cash management decision. For other payments, discretion in timing is possible. </li></ul>
  18. 20. Timing of Draws <ul><li>Funds are intended to be available when needed. </li></ul><ul><li>Draws should match timing of allowable </li></ul><ul><li>program expenditures. </li></ul><ul><li>Funds can be drawn as needed: </li></ul><ul><ul><li>Example – Payroll to cover salaries and allocable payroll taxes based on time charged to the Federally-funded program </li></ul></ul>
  19. 21. Grantee Responsibilities <ul><li>Execute grants. </li></ul><ul><li>Maintain minimum federal cash on hand by requesting funds from the Payment Management System only for immediate disbursement. </li></ul><ul><li>Report cash disbursements to the Payment Management System. </li></ul><ul><li>Maintain accurate accounting records. </li></ul>
  20. 22. Ease of Access Brings Responsibility <ul><li>Document each draw to show compliance with Federal regulations </li></ul>Be Careful Draw additional funds to overcome shortfalls elsewhere in the organization And Most Importantly
  21. 23. Potential Problems <ul><li>Invalid Payment Due Date- The payment due date should be the next business day (unless you warehouse your payments) The payment date cannot be a banking holiday or a weekend. </li></ul><ul><li>Potential Duplicate Payment Request – After making the required system checks like the date, account number, payment due date etc… PMS may suspect a duplicate payment; if so, they will ask to verify. </li></ul><ul><li>Insufficient Funds – PMS checks to see if there is enough funds to cover your request… if not, you will receive an error message. </li></ul><ul><li>No Bank Account – one or more sub-accounts selected does not have an associated bank account within PMS. </li></ul><ul><li>Different Bank Account – you will receive an error message if the sub-accounts involved with your payment request have different bank accounts. </li></ul><ul><li>Agency Restrictions - The awarding agency puts a hold on disbursements due to non-compliance of regulations. </li></ul>
  22. 24. PMS-272 Schedules <ul><li>PMS 272 – an overview of the status of the account which contains data by PMS to the recipient. </li></ul><ul><li>PMS 272-A – shows the award authorization and prior cumulative disbursements reported against individual awards. </li></ul><ul><li>PMS 272-B – shows the detail of total cash accountability reflected in PMS and a reconciliation report where the recipient can report advance payment problems. </li></ul>
  23. 25. PMS-272 Schedules (continued) <ul><li>PMS 272-C – provides a mechanism for the recipient to report problems with PMS data and know action will be taken. </li></ul><ul><li>PMS 272-E – shows advances and cash accountability by major program. </li></ul><ul><li>PMS 272-F – lists authorizations that have been posted, but the starting date has not arrived </li></ul><ul><li>PMS 272-G - Lists all awards posted that have become inactive. </li></ul>
  24. 26. Monitoring Expenditure of Funds <ul><li>Report expenditure of the funds drawn each quarter on Form 272. </li></ul><ul><li>Track expenditures during the life of a project on Form 272. </li></ul><ul><li>Reflect total expenditures upon closeout. </li></ul><ul><li>Support data in Form 272 within your accounting system. </li></ul>
  25. 27. 272 Reports <ul><li>The 272 should be submitted beginning with the ending of the first quarter in which funds are drawn down and for every quarter thereafter throughout the life of the grant. </li></ul>
  26. 28. 272 Timing <ul><li>The previous quarters data will remain online until the new data is uploaded at PMS. </li></ul><ul><li>The electronically transmitted 272 is normally processed after the end of a quarter. </li></ul><ul><li>After verification, the data is loaded into the 272 server. </li></ul>
  27. 29. 272 Passwords <ul><li>The electronic 272 password is not the same as your PMS/Smartlink password. </li></ul><ul><li>After three (3) incorrect tries, your password will be locked. </li></ul><ul><li>You must call the DPM Account Liaison to have it unlocked. </li></ul>
  28. 30. 272 Certifications <ul><li>It is no longer necessary to send the entire report. </li></ul><ul><li>Only the certification page is required. </li></ul><ul><li>The certification page must have an original signature by the “certifying officer”. </li></ul>
  29. 31. 272 reports and Cash on Hand <ul><li>You are required to calculate your cash on hand balance – PMS does not calculate it for you. </li></ul><ul><li>You should be cognizant of your cash on hand balance prior to certifying your report. </li></ul><ul><li>Entering you cash on hand end of period amount on line 5 will only be accepted if your report is balanced. </li></ul><ul><li>The 272 report cannot be submitted out of balance. </li></ul>
  30. 32. 272 and notifications <ul><li>PMS broadcasts reminders and special announcements to PMS users via e-mail. </li></ul><ul><li>Each quarter you will receive an e-mail alerting you that the PSC272 is available and the dates the reports are due. </li></ul><ul><li>You must have a valid and active e-mail address. </li></ul>
  31. 33. Financial Status Reports Rules and Regulations
  32. 34. Reporting Requirements <ul><li>Provisions </li></ul><ul><ul><li>“ Grantee shall submit semi-annual cumulative financial status report, summarizing expenditures during the reporting period in eGrants.” </li></ul></ul><ul><li>Code of Federal Regulations </li></ul><ul><ul><li>45 CFR 2543.52 </li></ul></ul><ul><ul><ul><li>Requires recipients of federal funds to use the Form 269 or Form 269A to report the status of funds. </li></ul></ul></ul>
  33. 35. Financial Status Reports <ul><li>Preparation </li></ul><ul><li>Completion </li></ul><ul><li>Submission </li></ul>
  34. 36. Types of FSRs <ul><li>Interim FSR </li></ul><ul><ul><li>An Interim FSR is a financial report that covers a period within a longer budget period (i.e., monthly, quarterly, or semi-annually). </li></ul></ul><ul><li>Annual FSR </li></ul><ul><ul><li>An Annual FSR is a financial report that typically covers a one-year period. </li></ul></ul><ul><li>Final FSR </li></ul><ul><ul><li>A Final FSR is a financial report prepared at closeout that covers the entire project period of the grant. </li></ul></ul>
  35. 37. Financial Status Reports - Definitions <ul><li>Financial Statements </li></ul><ul><ul><li>Written report of the financial condition of an entity. </li></ul></ul><ul><ul><li>Financial Statements include balance sheets, Income Statements, Statements of changes in net worth, statement of cash flows. </li></ul></ul><ul><ul><li>auditors issue opinions. </li></ul></ul><ul><li>Financial Reports </li></ul><ul><ul><li>Details financial data. </li></ul></ul><ul><ul><li>Can also be an itemized accounting that shows how grant funds were used (categories of cost). </li></ul></ul><ul><ul><li>reviewed by grantors for the financial progress of the grant. </li></ul></ul><ul><ul><li>used as a monitoring tool. </li></ul></ul>
  36. 38. Cash Basis vs. Accrual Basis <ul><li>The main difference between accrual basis and cash basis accounting is the time at which income and expenses are recognized and recorded. </li></ul><ul><li>The cash basis method generally recognizes income when cash is received and expenses when bills are paid. </li></ul><ul><li>The accrual basis recognizes income when it is earned (the creation of assets such as accounts receivable) and expenses when they are incurred (the creation of liabilities such as accounts payable). </li></ul>
  37. 39. Source Documents (Invoices, Checks, Receipts, timesheets, etc..) <ul><li>Complete – is all the information available?. </li></ul><ul><li>Accurate – is all the information presented correctly? </li></ul><ul><li>Reliable – can you depend on or verify through another source the validity of the document? </li></ul>
  38. 40. Uses of the FSR by CNCS Staff <ul><li>Compliance requirement to monitor the financial progress of a grant. </li></ul><ul><li>To confirm match requirements are met. </li></ul><ul><li>As a tool for risk assessment. </li></ul><ul><li>As a tool for reviewing renewal grants. </li></ul>
  39. 41. FSR Time Frames <ul><li>Reporting Period - (The time frame the report covers) </li></ul><ul><li>Budget Period - (Covers the budget time frame, usually a year) </li></ul><ul><li>Project Period - (Covers the life cycle of the grant) </li></ul>
  40. 42. What can go wrong with financial reporting? <ul><li>Default eGrants reporting dates are incorrect – get this fixed immediately. </li></ul><ul><li>Late reporting – even with an extension, report is tracked as “late” – submit and revise, if necessary. </li></ul><ul><li>Paper SF 272 or 269 – it will be returned. </li></ul><ul><li>Incorrect information: </li></ul><ul><ul><li>Indicating total unobligated funds as unliquidated obligations. </li></ul></ul><ul><ul><li>Indicating cash when using accrual-based accounting system. </li></ul></ul><ul><ul><li>Failing to report cumulative data. </li></ul></ul><ul><li>Illogical reporting: </li></ul><ul><ul><li>Zero reported as unliquidated obligations. </li></ul></ul><ul><ul><li>Total federal funds greater than amount awarded. </li></ul></ul><ul><ul><li>Amounts reported do not reconcile with the amounts reported to the Payment Management System on the SF 272 (a/k/a, Federal Cash Transaction Report (FCTR); PMS 272; PSC 272). </li></ul></ul>
  41. 43. What about special situation information? <ul><li>Use the remarks block </li></ul><ul><ul><li>Identify report as preliminary, if applicable - provide projected date to amend report. </li></ul></ul><ul><ul><li>Identify unusual numbers. </li></ul></ul><ul><ul><ul><li>High or low obligated amounts relative to time elapsed. </li></ul></ul></ul><ul><ul><ul><li>High or low unliquidated obligations. </li></ul></ul></ul><ul><ul><li>Identify program income if generated. </li></ul></ul><ul><ul><ul><li>How much </li></ul></ul></ul><ul><ul><ul><li>How was it applied </li></ul></ul></ul><ul><ul><ul><ul><li>Additive </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Deductive </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Matching </li></ul></ul></ul></ul>
  42. 44. Critical elements for financial reporting <ul><li>Timely – Ensure all deadlines are met. </li></ul><ul><li>Accurate – Use accounting data that has been reviewed. </li></ul><ul><li>Complete – Reports should contain all pertinent information relating to reporting period. </li></ul>
  43. 45. Major Processes for Preparing the Financial Status Report <ul><li>Ensure proper documentation in the files to support all information reported in the FSR. </li></ul><ul><li>All financial reports should be prepared with information that comes directly from the organization’s accounting system . </li></ul><ul><li>Conduct a review and reconciliation of the information to ensure accuracy prior to report submission. </li></ul>
  44. 46. eGrants <ul><li>CNCS System for submission and tracking of grant applications, financial status reports, progress reports, etc. </li></ul><ul><li>FSR reporting is completion of only 3 screens </li></ul><ul><ul><li>Identifying information </li></ul></ul><ul><ul><li>Transaction entry </li></ul></ul><ul><ul><li>Certification </li></ul></ul>
  45. 47. Reporting Expenses <ul><li>Before going into eGrants gather the correct information. Using a print out from your accounting system: </li></ul><ul><li>Get the total federal funds expended for the period </li></ul><ul><li>Gather all matching funds information </li></ul><ul><li>Calculate unliquidated obligations </li></ul>
  46. 48. Reporting Volunteer Hours <ul><li>Volunteer hours should be reported on a cumulative basis over the Budget year (the one year period) not the project period (the three year period) </li></ul><ul><li>  </li></ul><ul><li>For example </li></ul><ul><ul><li>Year 1 </li></ul></ul><ul><ul><ul><li>1st FSR Jan – Jun 21,028 </li></ul></ul></ul><ul><ul><ul><li>2nd FSR July- Dec (21,028 + 18,972) = 40,000 </li></ul></ul></ul><ul><ul><ul><li>Year 2 & 3  beginning balance should be zero </li></ul></ul></ul><ul><li>  </li></ul>
  47. 49. Questions Electronic copies of this material can be found at The Resource Center Search for Financial Accountability Seminar
  48. 50. !! PARTICIPANT NOTICES !! <ul><li>CERTIFICATES FOR TRAINING: All participants who attend and complete three or more sessions of the Financial Accountability Seminars can pick up a certificate of participation Sunday afternoon, Monday or Tuesday morning. </li></ul><ul><li>CFO – OIG – OGM SUNDAY CLOSING PLENARY: Please attend the Plenary Session [Sunday 3:15 –Salon G] with Jerry Bridges, Carol Bates and Peg Rosenberry to hear about OIG audit plans, address issues that arose during the day and learn about upcoming changes in grants policy. </li></ul><ul><li>RESOURCE TABLE: Please take advantage of this opportunity to meet with and discuss your questions and concerns with our experts who include presenters and a special guest from the Division of Payment Management at HHS. </li></ul>