Key Elements of Financial Management (PPT)

Key Elements of
Financial Management
Presented by: Kris Tecce [email_address] 877-363-9300

Learning Objectives
Increase knowledge of the CNCS and WV Commission grants management processes
Increase awareness of grant provisions and OMB regulatory requirements of CNCS grants
Increase aptitude for incorporating effective financial management practices
Increase understanding of the interconnection of fiscal and program management

Regulatory Requirements

Regulatory Requirements Regulatory Requirements Provide the Provide the Guidance and Foundation for Guidance & Foundation For Your Your Financial Management Systems Financial Management Systems AWARD LETTER AMERICORPS PROVISIONS STATE REQUIREMENTS OMB CIRCULAR REQUIREMENTS PROGRAM

Determination of Acceptability of Costs
Conditions in award letter
Provisions
OMB Circulars
Program Applicability
Allocable
Allowable
Reasonable
Necessary

Recipients are responsible for:
Managing and monitoring each project, program, sub-award, function or activity supported by the award
Effective control over and accountability for all funds, property, and other assets.
Comparing outlays with budget amounts for each award
Budget analysis and explanation of cost overruns or high unit cost
Office of Management and Budget OMB Requirements

Uniform Administrative Requirements
Sets standards for obtaining consistency and uniformity among Federal agencies in managing grants and cooperative agreements
Pre-award requirements
Post-award requirements for financial and program management
Property standards
Procurement standards
Reports and records
Close-outs

Cost Principles
Establishes cost principles and standards for federal funds
Circular establishes principles and standards to provide a uniform approach for determining costs and to promote effective program delivery, efficiency, and is designed to ensure that the Federal government gets its fair share of costs.

OMB Circular A-133 Audit Audit
A-133 audits must be performed annually, if
Your organizations expends $500,000 or more of federal funds in your fiscal year (for fiscal years ending after 12/31/03)
The Audit must be performed by an independent certified public accountant
The cost of audit should be included as part of administrative costs and not a direct cost to any grant

Summary of Relevant OMB Circulars Http://www.whitehouse. gov/OMB/circulars/index.html

CNCS Grant Provisions
Guiding principles for Grant Activities
Contain both Program and Fiscal guidelines
Should be read by and available for both Program and Financial staff
Should be distributed to all sub-grantees
CNCS revises and updates Grant Provisions annually

Match
and
In-Kind Donations

Attempting to influence legislation.
Organizing or engaging in protests, petitions, boycotts, or strikes.
Assisting, promoting or deterring union organizing.
Impairing existing contracts for services or collective bargaining agreements.
Engaging in partisan political activities or other activities designed to influence the outcome of an election to any public office.
Participating in, or endorsing, events or activities that are likely to include advocacy for or against political parties, political platforms, political candidates, proposed legislation, or elected officials.
CNCS Prohibited Program Activities

Engaging in religious instruction; conducting worship services; providing instruction as part of a Program that includes mandatory religious instruction or worship; constructing or operating facilities devoted to religious instruction or worship; maintaining facilities primarily or inherently devoted to religious instruction or worship; or engaging in any form of religious proselytization.
h. Providing a direct benefit to:
A for-profit entity;
A labor union;
A partisan political organization;
An organization engaged in the religious activities described in the preceding subclause, unless Grant funds are not used to support the religious activities; or
A nonprofit entity that fails to comply with the restrictions contained in section 501(c) (3) of U.S. Code Title 26.
i. Voter registration drives by AmeriCorps members is an unacceptable service activity.
CNCS Prohibited Program Activities

WV Commission Cooperative Agreement
Commission approval for any changes
Reporting deadlines
Nepotism not allowed
MLK project required
Add Commission to publicity
Attend required training
Sustainability plan

Policies & Procedures

Policies & Procedures
Documented Policies and Procedures are important because:
They are the standards for the organization’s operations
They help in maintaining information that is crucial to operations that would otherwise remain in employees’ “heads”
They help in orienting new employees and substitutes if the appropriate personnel are absent

Specific Policies & Procedures for CNCS
Organizations want to review current Policies & Procedures to ensure that activities required for CNCS are documented including:
Financial Reporting
Cash draw-downs
Budgeting
Sub-grantee management

Documentation

Documentation
Design a system to group grant activities and documents. Include items such as:
Grant letter, amendments and original grant application
Documents from sub-grantees
Expenses/vendors, consultant agreements, etc.
General correspondence
Monthly financial reports (e.g., budget to actual)

Documentation Primary Goal
All expenditures should contain documentation (i.e., brief descriptions, agendas, reports etc.) that support why the transaction is allowable for AmeriCorps purposes
Accounting records should trace back to source documentation

Section I. A. Personnel Costs
Salary
Signed timesheets with supervisory approval
Quarterly payroll returns (941)
Payroll register
Personnel file with salary/wage information
Employment contract
Cancelled checks/Direct deposit schedule

Staff Activity Reporting Summary
All salaries and wages charged to AmeriCorps grants must be supported by signed Time & Attendance records except for:
State, Local and Indian Tribal governments must comply with OMB A-87
Educational Institutions must comply with OMB A-21

OMB A-122 requirements of documentation for Activity reporting:
Must reflect an after-the-fact distribution of the employee actual activity
Must account for the total activity of each employee
Must be prepared at least monthly and should coincide with one or more pay periods
Must be signed by the employee
Time & Activity Reporting

Time & Activity Reporting
Budget estimates do not qualify as support for expenditure, 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

B. Personal Fringe Benefits
Benefits – For budget there is an estimate calculated, however you must have supporting documentation for amounts charged to grants
Insurance receipts
Cost allocation plan
Paid invoices

C.1 Staff Travel or C.2 Member Travel
Travel
Travel authorization
Paid travel-related receipts/invoices
Per diem rates (applicable for region)
Mileage calculation
Travel reimbursement requests
Reconciliation of advances to payments

Equipment Maintenance Records
Description and funding source (including grant number)
Manufacturer serial number
Title holder’s name and address
Acquisition date and cost
Percentage of Federal financial participation
Records should be maintained for all equipment in use and should include at a minimum:

E. Supplies
Paid invoices/receipts that clearly shows amounts
Cost allocation plan, if used to allocate expenses, that demonstrates consistency of treatment. Costs must be uniformly treated for both federally financed and other activities within organization

F. Contractual and Consultant Services
Payments to consultants services under this grant may not exceed $443 per day (exclusive of indirect expenses, travel, and supplies)
Grantee should retain consulting contract and invoices that support work provided.

G.1. Staff or G.2. Member Training
Training documentation
Training agenda
Course description and cost
Sign-in sheet (if in-house)
Consultant/Trainer agreement
Paid invoices

H. Evaluation
Consultant agreement
Paid invoices
Evaluation results
Other relevant documentation

Section II. Member Costs
Signed timesheets with supervisory approval
Quarterly payroll returns (941)
Insurance receipts
Payroll register

Section II. Matching
Grantees must match member living allowance in cash
Match must be at least 15% of the minimum living allowance
Living allowance paid in excess of minimum must be paid entirely from grantee share

AmeriCorps Members Eligibility Requirements
U.S. Citizen or Permanent Resident
At least 17 years (16 if Youth Corps)
High School diploma or GED or agree to obtain one

Member Contracts
Amount of Living Allowance, method of Payment
Other Member Benefits
Start and End Dates of Term
Minimum Hours
Prohibited Activities

Member Contracts (continued)
Expectations for Member Behavior
Rules for Termination, Suspension, Disciplinary Action
Drug-Free Workplace Act Requirements
Grievance Procedures

Prohibited Activities May Not Be Performed In The Course of Duties
Grantee should have a plan to ensure members do not participate in prohibited activities
Lobbying Activities
Political Activities
Religious Activities
Advocacy Activities
Fundraising Activities

Member Time sheets
Identify eligible activities
Separate service and training hours
Ensure accuracy
Member and supervisor signatures

National Service Trust Forms
Enrollment forms
Exit Forms
Change of term
WBRS timesheets

Member Files Overview of set-up & Organization

Section III. Administrative Costs
Option A – Organization using the Corporation Fixed Percentage Method
Indirect costs can be up to 5% of Corporation share, and match in grantee share cannot exceed 10%
These rates can be used with out supporting documentation.
Option B – Organization has Federally Approved Indirect Cost Plan Use of indirect rate
Calculations done using supporting rate
Documentation supporting amounts used in calculating rate
Calculations to support amounts reported on Periodic Expense Report (PER)

Administrative Costs Include
General expenses related to the overall administration of an organization that receives Corporation funds
Administrative Costs includes items such as:
Accounting, financial, auditing, contracting or general legal services
Internal evaluation (except for programs)
General liability insurance that project the organization (Not solely related to a program)

Administrative Costs
Do not include items such as:
Allowable direct charges for Members (living allowance, insurance payments made on Members behalf)
Costs for staff who train, place or supervise Members or directly benefit programs
Independent evaluations of programs
Facility costs that primarily support programs

Records Retention
Retain all financial records:
3 years from date of submission of final Financial Status Report
If there is an on-going audit: 3 years from final audit resolution
It’s a good idea to retained Member Records for seven years, which is the length of time they have to use their educations award

Accounting

Efficient Accounting System
System must be capable of:
Distinguishing grant verses non-grant related expenditures
Identifying costs by program year
Identifying costs by budget category
Differentiating between direct and indirect costs (administrative costs)

Efficient Accounting System
An Efficient Accounting System (Continued):
Maintains Federal/non-Federal matching funds separately from grant funds
Records in-kind contribution as both revenues and expenses
Allows management to easily obtain financial reports at both the summary or detailed levels
Accounting information and documents should correlate to financial reports submitted to CNCS

Accounting system that Does not segregate funds Department of Education Matching Grant AmeriCorps CNCS Grant Ford Foundation Matching Grant Accounting System

Accounting system that properly segregates funds Department of Education Matching Grant AmeriCorps CNCS Grant Ford Foundation Matching Grant Accounting System Grant 1 Grant 2 Grant 3

Budgets & Controls

Budget Controls
A properly approved budget is:
A financial blueprint to help an organization meet its goals and objectives
A tool to help ensure an organization is meeting matching requirements
An Organization should:
Periodically review budget to actual expenses
Assure budget changes are properly approved

Budget Controls - continued
AmeriCorps program must obtain prior approval for any changes to their approved budget.
Budget line item changes should be submitted in writing

Budget Amendments
Written request to Commission
Approval in writing from Commission
Commission program officer requests change through CNCS prog. officer
Egrants personnel makes amendment

Match & In-kind Documentation

Must be verifiable from recipient records
Must not be included as contribution for other federally-assisted program
Must be necessary and reasonable for accomplishing program objectives
Must be allowable according to cost principles (OMB Circulars)
Match for Member Support Costs must not come from Federal funds (except healthcare)
Criteria for Matching AmeriCorps Funding

Recording and Reporting In-Kind Contributions
In-kind contributions documentation have same standards as other expenditures
In-kind contributions must be entered into the general ledger and WBRS in order to be recognized as match
In-kind contributions should be recorded as both a revenue and expense

Documenting In-Kind Contributions Received Document the basis for determining the value of personal services, material, equipment, building, and land. Give the donor a receipt signed by donor which includes: * Name of donor * Date of donation * Description of item/service * Estimated value Keep a copy of the receipt in your files.

Name of Contributing Organization/Agency/Business/Individual: ____________________________________ Address of Above Contributor: _______________________________________ Phone #: ________________________ Printed/Typed Name of Contributor’s Authorized Signee: ________________________ Title: ________________________ Signature of Authorized Signee: _____________________________________________ Date: ______________________________ In-Kind Contribution Form The ABCD Tutoring Program 1299 N. Main Street, Suite 110, Great City, Good State 00000-1234, (800)555-1212 Fax: 321-1234 Was Contribution Obtained with or Supported by Federal Funds (If so, indicate source) Who Made this Value Determination How was Value Determined(i.e. Actual, Appraisal, Fair market value) Real or Approximate Value of Contribution Purpose for which Contribution was made Description of Contributed Item(s) or Service Date of Contribution

What-would-you-pay-if-it-was-not-donated?
Valuation of In-Kind Services Fair market value =

Contributed Services Valuation - Examples

Financial Reporting

Financial Reporting
All Financial reports must be supported by the accounting system and should match the information in the general ledger.
Final financial status report is due within 90 days after the end of the grant and must be cumulative
Financial records must be retained for three years from the date of the submission of the final Financial Status Report (SF 269A)

Web Based Reporting System (WBRS) Implications for Financial Reporting
Periodic Expense Report (PER) is an essential report in the WBRS:
Must be completed to create Financial Status Report (FSR)
Should contain all program expenditures (i.e. cash, accruals, journal entries, in-kind contributions)
Should be created utilizing source documentation from Accounting software

WEB BASED REPORTING SYSTEM (WBRS) FINANCIAL INFORMATION FLOW Documentation Translate to Accounting Information (G/L) Reported to CNCS

WBRS Implications for Funds Management
Financial Status Reports (FSR)
FSR will be generated from PER approved during the dates with in the designated period
Data is not submitted to the Corporation until saved as “approved”
Grantee must have PER’s with dates covering exact date range as on FSR

Internal Controls

Why Have Internal Controls?
Improve accountability to Constituents (Community, Board of Directors, CNCS, etc.)
Help organization achieve performance and budget targets
Improve reliability of financial reporting
Improve compliance with laws, regulations
Prevent loss of resources and public trust

Elements of Good Internal Controls
Documented policies and procedures
Adequate review process for financial reports and budgets
Adequate cash management procedures (e.g., monthly bank reconciliations)
Physical safeguarding of assets
System to track members’ & employees’ activities
System to follow-up on problems identified to ensure resolution

Common Findings
In an effort to learn from the past, we have summarized the common findings from the most recent Inspector General Audits
This also acts as a good wrap-up, reinforcing what we discussed today.

Common Audit Findings
Lack of written policies and procedures
Lack of or insufficient documentation
Accounting records do not identify program costs
Lack of supporting documentation for required match
Inadequate tracking of member hours
Incomplete Member Records

Common Audit Findings
Lack of internal controls
Lack of segregation of duties
Lack of documentation to support expenditures
Inadequate supporting documentation for distribution of staff hours between federal and other activities

Reflection
Discuss one thing that you learned or was reminded at today’s training
And/Or
How can you take something you learned today back to your office and implement it

Key Elements of Financial Management (PPT)

by MRicky on May 13, 2010

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Key Elements of Financial Management (PPT) Presentation Transcript